October 2013 Railway Age Magazine by Railway Age

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BAy AreA Buildup A closer look At lNG 2014 rAilroAd FiNANciAl desk Book

RailwayAge

OCTOBER 2013

visit us at www.railwayage.com Features a closer look at lNg

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RailwayAge RAILROAD FINANCIAL DESKBOOK 2014

Contents

DB1

A TENTATIVE MARKET By Tony Kruglinski

DB9

DIREcToRy oF FINANcIAL PLAyERS

supplement On the COver San Francisco blends old rail transit gear (such as this restored PCC) and new.

Photo: lyndon Henry Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 55 Broad St., 26th Fl., New York, NY 10004. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 214, No. 10. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico. However, the publisher reserves the right to limit the number copies. Subscriptions should be requested on company letterhead. Subscription pricing to others for Print or Digital only versions: $100.00 per year/$151.00 for two years in the U.S., Canada, and Mexico; $139.00 per year/$197.00 for two years, foreign. Foreign $239.00 (U.S. funds) per year/$397.00 for two years for Air mail delivery. When ordering Both Print and Digital: $150.00 per year/$227.00 for two years in the U.S., Canada, and Mexico; $208.00 per year/$296.00 for two years, foreign. Foreign $308.00 (U.S. funds) per year/$496.00 for two years for Air mail delivery. Single Copies: $36.00 per copy in the U.S., Canada, and Mexico/$128.00 foreign All subscriptions payable in advance. COPYRIGHT© 2013 Simmons-Boardman Publishing Corporation. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212-221-9195. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Cust.#7204564; Agreement #41094515. Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2. Address all subscriptions, change of address forms and correspondence concerning subscriptions to Subscription Dept., Railway Age, P.O. Box 1172, Skokie, IL 60076-8172, Or call toll free (800) 895-4389, or (402) 346-4740. Printed at Cummings Printing, Hooksett, N.H. ISSN 00338826.

October 2013 Railway age 1

RailwayAge

From the Editor William C. Vantuono

Editorial and ExEcutivE officEs Simmons-Boardman Publishing Corp. 55 Broad Street, 26th Fl. New York, NY 10004 212-620-7200; Fax: 212-633-1863 Website: www.railwayage.com

Feeling “real good”about LNG

iquefied Natural Gas. It’s the next big breakthrough in locomotive technology. It’s a huge game-changer. It’s an almost unprecedented opportunity to drive fuel costs down. It’s the biggest thing since dieselization. These are kinds of things we’ve been hearing about LNG. While such pronouncements do carry some truth, experience tells us that the railroad industry—traditionally conservative, and slow to enact sweeping changes—is going to take its time and not (pardon the pun) get all gassed up over LNG before extensive testing and development have occurred. Industry consultant Jon T. Gabrielson has published a white paper, “An Analysis of Long-Run Economic Scenarios for LNG versus Diesel for Transportation Fuel,” that examines a broad spectrum of the available historical, current, and projected future data that can be brought to bear on the question of whether LNG is likely to be a price competitive transportation fuel for railroads as well as on-highway trucking. “The results and conclusions of this analysis (including a data walk-through of all the available historical, current, and future data for crude oil, diesel, natural gas and LNG, and analysis of three main factors, each of which may increase or decrease the relative competitiveness of LNG vs. diesel in the future) is that ultimately it all comes down to what you believe the future prices for crude oil will be, and thus what the future prices for diesel will be,” Gabrielson notes: “If you believe that crude oil/diesel will predominately be above $100/bbl. ($3.90/ gallon diesel), then you will at least break even at a three-year simple payback, even if no improvements or reductions in incremental initial investment and liquefaction and logistics can be made.

“If you believe that crude oil/diesel will at times go as low as $75/bbl. ($3.00/ gallon diesel) then you will only break even on a three-year simple payback if it is possible for very significant improvements or reductions in incremental initial investment and liquefaction and logistics costs to be made. These may or may not be possible, in which case LNG would be a net loser at those crude oil/diesel prices. “If you believe that crude oil/diesel will return to levels prior to 3-4 years ago when it had logged 25 years in the $25/ bbl. ($1.20/gallon diesel) range, or even just to half of today but double the past 25 years at $50/bbl. ($2.10/ gallon diesel), then converting to LNG could not possibly generate economic benefits. “Even as low as $50/bbl., crude oil would be higher than it has been at any time in history except the past nine years, and it has been in the low $60s as recently as four years ago. This appears to be a perfect example of where one should try out the LNG technologies, continuously keep a small portion of one’s fleet LNG to develop experience and perfect/optimize the use of the technology, while closely watching the crude oil pricing environment to determine whether or not to embrace LNG in a big way.” “To feel really good about LNG,” concludes Gabrielson, “you’ll want crude oil to remain at $100 or above.” For more on LNG, see p. 14. Much has changed in six years, particularly diesel vs. natural gas fuel prices. The pendulum has moved toward the LNG side, but it would be wise to consider that it could swing in the opposite direction, perhaps when you least expect it.

ARTHUR J. McGINNIS, Jr., President and Chairman JONATHAN CHALON, Publisher jchalon@sbpub.com WILLIAM C. VANTUONO, Editor-in-Chief wvantuono@sbpub.com DOUGLAS JOHN BOWEN, Managing Editor dbowen@sbpub.com LUTHER S. MILLER, Senior Consulting Editor lmiller@sbpub.com CONTRIBUTING EDITORS: Alex Binkley, Roy H. Blanchard, Lawrence H Kaufman, Bruce E. Kelly, Anthony D. Kruglinski, Ron Lindsey, Ryan McWilliams, Jason H. Seidl, Frank N. Wilner Creative Director: Wendy Williams Art Director: Sarah Vogwill Corporate Production Director: Mary Conyers Production Manager: Jessica Cajas Production Director: Eduardo Castaner Marketing Director: Erica Hayes Conference Director: Jane Poterala Circulation Director: Maureen Cooney WEstErn officEs 20 South Clark Street, Suite 1910, Chicago, IL 60603 312-683-0130; Fax: 312-683-0131 Engineering Editor: Mischa Wanek-Libman mischa@sbpub.com Assistant Editor: Jennifer Nunez jnunez@sbpub.com George Sokulski, Associate Publisher Emeritus gsokulski@sbpub.com intErnational officEs 46 Killigrew Street, Falmouth, Cornwall TR11 3PP, United Kingdom Telephone: 011-44-1326-313945 Fax: 011-44-1326-211576 International Editors: David Briginshaw, Keith Barrow, Kevin Smith customEr sErvicE: 800-895-4389 Reprints: PARS International Corp. 253 West 35th Street 7th Floor New York, NY 10001 212-221-9595; fax 212-221-9195 curt.ciesinski@parsintl.com Railway Age, descended from the American Rail-Road Journal (1832) and the Western Railroad Gazette (1856) and published under its present name since 1876, is indexed by the Business Periodicals Index and the Engineering Index Service. Name registered in U.S. Patent Office and Trade Mark Office in Canada. Now indexed in ABI/Inform. Change of address should reach us six weeks in advance of next issue date. Send both old and new addresses with address label to Subscription Department, Railway Age,PO Box 1172, Skokie, IL 60076-8172, or call toll free 1-800-895-4389. Post Office will not forward copies unless you provide extra postage. Photocopy rights: Where necessary, permission is granted by the copyright owner for the libraries and others registered with the Copyright Clearance Center (CCC) to photocopy articles herein for the flat fee of $2.00 per copy of each article. Payment should be sent directly to CCC. Copying for other than personal or internal reference use without the express permission of SimmonsBoardman Publishing Corp. is prohibited. Address requests for permission on bulk orders to the Circulation Director. Railway Age welcomes the submission of unsolicited manuscripts and photographs. However, the publishers will not be responsible for safekeeping or return of such material. Member of:

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Industry Indicators shoRt line and ReGional tRaffiC indeX

tRaffiC oRiGinated

fouR WeeKs enDIng aUgUST 31, 2013

carLoaDS

maJoR u.s. RailRoads By Commodity grain farm Products ex. grain grain mill Products food products chemicals Petroleum & Petroleum Products coal Primary forest Products Lumber and Wood Products Pulp and Paper Products metallic ores coke Primary metal Products Iron and Steel Scrap motor Vehicles and Parts crushed Stone, Sand, and gravel nonmetallic minerals Stone, clay & glass Waste & nonferrous Scrap all other carloads total u.s. CaRloads

auG. ’13 66,563 3,394 43,649 35,071 121,343 52,124 482,684 5,947 13,368 26,148 25,092 14,641 41,962 18,885 67,895 89,545 21,477 35,294 14,800 16,701 1,178,619

auG. ’12 73,133 3,658 47,019 36,798 118,720 43,976 492,599 6,216 13,017 24,660 30,790 13,962 41,569 18,551 63,051 81,900 20,260 32,044 11,940 20,301 1,173,334

% ChanGe -9.0% -7.2% -7.2% -4.7% 2.2% 18.5% -2.0% -5.8% 2.7% 6.0% -18.5% 4.9% 0.9% 1.8% 7.7% 9.3% 6.0% 10.1% 24.0% -17.7% 0.5%

314,562

307,009

2.5%

1,493,181

1,480,343

0.9%

carLoaDS

chemicals coal crushed Stone / Sand / gravel food & Kindred Products grain grain mill Products Lumber & Wood Products metallic ores metals & Products motor Vehicles & equipment nonmetallic minerals Petroleum Products Pulp, Paper & allied Products Stone, clay & glass Products Trailers / containers Waste & nonferrous Scrap all other carloads

ComBined u.s./Canada RR

fouR WeeKs enDIng aUgUST 31, 2013

InTermoDaL maJoR u.s. RailRoads By Commodity TraILerS conTaInerS total units

310,000 320,000 330,000 340,000 350,000

TraILerS conTaInerS total ComBined units

(% change from aUgUST 2012)

% ChanGe 0.8% 4.9% 4.4%

6,401 216,650 223,051

5,656 209,151 214,807

13.2% 3.6% 3.8%

Transportation (train and engine) 66,188 (1.59%)

125,672 1,128,558 1,254,230

123,976 1,078,612 1,202,588

1.4% 4.6% 4.3%

total employees: 163,420 % ChanGe fRom auGust 2012: 0.45%

aveRaGe WeeKly u.s. Rail CaRloads: all Commodities (not seasonally adjusted)

360,000 370,000 380,000 390,000 400,000

RailRoad employment, Class i linehaul CaRRieRs, auGust 2013

auG. ’12 118,320 869,461 997,781

Source: monthly railroad Traffic, association of american railroads

executives, officials, and Staff assistants 9,819 (0.43%)

Transportation (other than train & engine) 6,777 (1.60%)

maintenance of equipment and Stores 29,329 (-0.37%)

Professional and administrative 14,050 (0.49%)

maintenanceof-Way and Structures 37,257 (-0.50%)

Source: Surface Transportation Board

employment up yeaR-oveR-yeaR, doWn fRom past month figures released by the Surface Transportation Board show class I railroads employed 163,420 people in mid-august, up 0.45% from august 2012, but down 536 people, or 0.33%, from the previous month of July. four of six categories gained year-over-year, but all six categories retreated from mid-July levels, led by Professional and administrative, off 0.84%.

Railway age

October 2013

0.7% -3.6% 16.3% -8.3% -3.8% -7.5% 3.4% 8.4% 5.4% -1.7% 30.0% -0.8% 1.8% -1.5% -0.6% 6.7% -6.5%

auG. ’13 119,271 911,908 1,031,179

ComBined u.s./Canada RR

% ChanGe

auGust 2013 - 375,728 auGust 2012 - 377,950

Canadian RailRoads TraILerS conTaInerS total units

oRiGinated auG. ’12 44,512 24,813 26,801 13,138 21,539 7,609 10,024 4,428 22,212 11,434 1,429 2,237 19,467 13,429 46,372 11,198 97,308

total CaRloads, auGust 2013 vs. 2012

Canadian RailRoads all Commodities

oRiGinated auG. ’13 44,824 23,922 31,182 12,044 20,723 7,040 10,364 4,798 23,417 11,235 1,857 2,219 19,813 13,230 46,097 11,950 91,013

By Commodity

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Industry Outlook TIGER V aids CAGTC projects

California HSR work delayed again

California High-Speed Rail authority (CHSRa) officials have acknowledged that initial construction of the golden State’s planned high speed rail system, to begin in the Central Valley, will not begin this fall. Officials say it will be a “few months” more before construction begins, but no formal groundbreaking ceremony has been set. Officials also note initial preparation work, including surveying and soil testing, began in august. CHSRa says it has the required permits and acquired land to begin construction of the first 29-mile section, linking Fresno and Madera, Calif. But local media report the project contractor seeks to proceed on several miles of the route all at once. “we could be out there this week if we wanted to just knock down one building,” said CHSRa CeO Jeff Morales. But “that doesn’t make economic sense.” CHSRa in august awarded a $985 million contract to the Tutor Perini/Zachry/ Parsons joint venture team to oversee constuction of the first segment of the 700mile HSR system, plus $53 million in provisional sums.

Purple Line FEIS sparks friction

Cold Train fleet expands again

Cold Train has expanded its washington State-based refrigerated container fleet to more than 400 state-of-theart Hyundai 53-foot containers while adding new destinations on the east Coast, due to continued growth. Cold Train is now delivering refrigerated cargo from washington and Oregon to 19 states, and has begun regular express service to Toronto, Ontario. 6

Railway age

October 2013

Maryland Transit administration (MTa) says the public comment period for the Purple line Final environmental impact Statement (FeiS) has been extended 15 days, with the comment period now ending Oct. 21, 2013. MTa said the extension comes “[i]n response to several requests from the community, stakeholders and project partners.” Opponents of the Purple line light rail transit project, notably concentrated on the proposed line’s western segments in Montgomery County, have ardently called for more time to voice objections to the plan. The $2.2 billion, 16-mile Purple line would span two Maryland counties north of washington, D.C., with four connections to washington’s Metro system. average daily ridership in 2040 is projected to be 74,000.

The U.S. Department of Transportation has announced 52 projects in 37 states that will receive funding from TigeR V, the fifth round of Transportation investment generating economic Recovery (TigeR) grants. Of those 52 projects, 25 are devoted to freight or have a strong freight component accounting for over $205 million, or 43%, of the total $474 million announced through the grant program. Four projects are sponsored by Coalition for america’s gateways and Trade Corridors (CagTC) member organizations: • Florida Department of Transportation (FDOT) Florida Freight & Passenger Rail enhancement. • Mississippi Department of Transportation Mississippi River Bridge Rehabilitation. • San Diego Association of governments [amtrak] Pacific Surfliner Coastal Railway Bridges. • Maryland Port Administration Port of Baltimore enhancements. FDOT’s Florida Freight & Passenger Rail enhancement will be used to improve the linkage of Southern Florida’s two major freight rail carriers—CSX and Florida east Coast Railway—to improve service and, working with the South Florida Regional Transportation authority (SFRTa), also improve passenger rail connectivity in the region. “This grant will allow FeC to handle more traffic from Port Miami and Port everglades as well provide flexibility for freight movements in South Florida,” said FeC CeO Jim Hertwig. USDOT said that demand for the TigeR program outweighed available funds, and during all five rounds, USDOT received more than 5,200 applications requesting more than $114.2 billion for transportation projects across the country. The TigeR program has distributed roughly $3.6 billion to a total of 270 projects throughout its five funding rounds.

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Market

New York MTA taps Kawasaki for M-9 railcar order Kawasaki Rail Car, inc. has been awarded a $1.8 billion contract by New york’s Metropolitan Transportation authority to supply an initial order of 92 M-9 married-pair electric multiple-unit (eMU) cars to the long island Rail Road. The contract also covers additional anticipated deliveries of 584 M-9s for both liRR (top left) and sister Metro-North Railroad (top right). The official liRR request notes, “Base order cars, which will replace an equal number of M-3 vehicles, are funding in the 2010-2014 Capital Program.” liRR’s request noted three bidders competed for the order, with technical and price comparisons resulting in Kawasaki being the “highest rated proposer with the lowest unit price and overall price.” The design will include “reversible” third rail shoes for anticipated future operations involving both liRR and Metro-North.

ARKANSAS AND MISSOURI RAILROAD: Received three eMD SD70aCe demonstrator locomotives with aC traction, delivered by eMD parent company Progress Rail Services. CONTINENTAL RAIL CORP.: Has hired energy and infrastructure investment banking firm Taylor-DeJongh ltd. to assist it with developing a freight railcar acquisition finance program. The company, seeks to establish an initial fleet of approximately 6,000 railcars for lease to third parties. DART/DCTA/FORT WORTH TRANSPORTATION AUTHORITY (DALLAS): launched a joint goPass℠ mobile ticketing application for use throughout the Dallas/Fort worth metroplex. Danish firm Unwire won the contract “based on its experience overseas with mobile ticketing in large urban markets with multiple agency participants,” the agencies said in a joint statement. 8

Railway age

October 2013

KANSAS CITY: gave final approval to a joint venture construction contract to St. Joseph, Mo.-based Herzog Contracting Corp. and alameda, Calif.based Stacy and witbeck for the city’s initial 2.2-mile streetcar line.

CENTRAL JAPAN RAILWAY: Published a Preliminary environment assessment on September 18 for a maglev line 277 miles in length, planned to link Tokyo and Nagoya at speeds of up to 505 km/h (313 mph).

MARYLAND TRANSIT ADMINISTRATION: awarded a $150 million contract to alstom Transport life Services, alstom’s maintenance business in North america, to overhaul and modernize Baltimore’s fleet of 53 light rail vehicles.

NETHERLANDS RAILWAYS: informed ansaldoBreda to retrieve 16 V250 Fyra high speed rail trains, which the railroad has rejected, citing what the railroad calls massive technical failure. ansaldoBreda disputes the charge.

MTA NEW YORK CITY TRANSIT: is adding 120 digital kiosks at 21 subway stations by year’s end, offering one-touch navigation assistance, provided by CBS Outdoor, a division of CBS Corp., and Control group.

Worldwide ARGENTINA: Plans to revoke the FerroCentral long-distance passenger concession and return the services to state control.

SAUDI LANDBRIDGE CO.: Selected Parsons Brinckerhoff, in association with Fluor Corp., to provide project management consulting services for design and construction of a new, 590-mile double-track railway, primarily for freight service, between the Red Sea and the Persian gulf. WESTERN AUSTRALIA DoT: Selected a joint venture of Parsons Brinckerhoff and aeCOM to form an integrated services team for the next phase of the 13.7-mile Metro area express (MaX) light rail network in Perth.

Kawasaki Rail Corp.

North America

Watching Washington FRank n. wilneR

Discontent sprouting down on the farm

he story is told of the grain farmer, returning home from the bank that denied him a loan, to discover a hail storm destroyed his wheat field, a twister took off the barn roof, and a note from his wife that she ran off with the hired hand. Emotionally distraught, the farmer races outside, shakes his fist viciously in the direction of a passing train, and screams, “Damn that railroad.” The relationship between farmers and railroads hasn’t much improved since the 19th century when alleged discrimination in freight rates and freight-car allocation were the congressional impetus for economic regulation and creation of the Interstate Commerce Commission (now the Surface Transportation Board, STB). Farmers are price takers, paying inbound freight for their fertilizer, accepting market determined prices for their grain, and paying outbound freight (negotiated with railroads by grain merchants) for their harvest. Grain-belt frustrations are many. South Dakota farmers grumble that Canadian Pacific reneged on a promise to invest $300 million in infrastructure upgrades following CP’s purchase of Dakota, Minnesota & Eastern Railroad, thus adversely affecting South Dakota grain shipments to Minneapolis, Chicago and Kansas City. In North Dakota, plans to construct a $30 million grain elevator with a 120-car fast-loading circle-track served by a short line were canceled after BNSF allegedly declined to quote a through rate to the Pacific Northwest. North Dakota farmers also object that while distances from local elevators to the Pacific Northwest are shorter than from Nebraska, grain rates between Nebraska and the Pacific Northwest are more favorable.

So farm interests are seeking from Congress legislative remedies, including changes to the Staggers Rail Act of 1980, which partially deregulated railroads. Farmers discard that inflationadjusted rail grain rates fell 39%, on average, since 1980, and brush aside the close correlation between average rail rates and the railroad cost recovery index (that measures price changes in fuel, materials, supplies and labor).

Farmers seek “substantive support for rail customer claims regarding rail service problems in rural America.” That average, farmers say, is skewed by lower rates on more competitive traffic, and they also assert their revenue-to-variable-cost ratio has increased where rail competition has declined. They reject as irrelevant that prices for seed, fuel and fertilizer have risen far greater than railroad revenue per ton-mile. Farmers point to a 2010 congressionally ordered Department of Agriculture (USDA) report that found “the rapid consolidation of the railroad industry through mergers has resulted in a decrease in the unrestricted interchange of traffic, routing choices and the level of competition among railroads.” The report said also that between 1992 and 2007, “almost 75% of agricultural areas lost rail competition.”

Farmers additionally say it is impractical to truck their grain to ports or to elevators from which lower rail rates are available, citing the USDA study’s conclusion that “rail is the only cost-effective mode of transportation available to many agricultural producers” (owing to the weight, bulk and low value of farm products). The USDA said railroads transport nearly all the grains and oilseeds produced in Montana, more than 70% of North Dakota farm commodities, and more than half of South Dakota’s agricultural harvest. Farmers want Congress to order an update on that 2010 report, hoping it will “provide substantive support for rail customer claims regarding rail problems in rural America,” and cause Congress to instruct the Secretary of Agriculture to take a leading role before the STB on issues affecting farmers, such as freight rates, interchange agreements and reciprocal switching. (Such a requirement expired with the termination of the Interstate Commerce Commission.) Railroads are firm in the conviction that farm interests have benefited significantly through improved rail service since passage of the Staggers Rail Act. The Association of American Railroads says, “Every time a study on our rail rates comes out, it shows we’re not fleecing shippers.” Of course, we all want to pay less for what we buy and collect more for what we sell. In considering the pleas of farmers, Congress might take note of a 1933 USDA report, which concluded that “preservation of an adequate railroad transportation machine is more important to the country than lowered freight rates.” October 2013 Railway age 9

Update Supply BriefS

Amtrak tests new Siemens gear

alstom Transport life Services, alstom’s maintenance business in North america, has been awarded a $150 million contract by the Maryland Transit administration (MTa) to overhaul and modernize Baltimore’s fleet of 53 light rail vehicles. alstom will remove all interior and exterior components from each car and address any necessary carbody repairs. alstom will then re-equip each train with new propulsion systems, onboard aTC (automatic train control) technology, closed circuit TVs (CCTV), climate control units, and new doors, seating, and carpets. The overhaul program is scheduled to last approximately four years, with the last overhauled vehicle returning to Baltimore in May 2018. The lRVs are scheduled to arrive beginning this month at alstom’s Hornell, N.y., facility, where the refurbishment will be done. The project will add about 15 years to the vehicles’ lifespan, alstom says..

Siemens Mobility gets nod for Calgary light rail order Calgary Transit is ordering 60 new S200 light rail vehicles from Siemens Mobility, an increase of 10 from previous plans to acquire 50 new lRVs. Siemens’s successful effort means the albertan city’s CTrain lRT fleet will continue to be represented by Siemens products, currently including Siemens U2 models, used by many early North american lRT startups. The contract is valued at roughly C$192 million. The new cars will begin arriving on the property in mid-2015, with final delivery in December 2016. Siemens Mobility will produce the cars at its Sacramento, Calif., facility. 10

Railway age October 2013

ne of three Amtrak ACS-64 (Amtrak Cities Sprinter) electric locomotives from Siemens Mobility, no. 602, began testing last month on the Boston-New YorkWashington Northeast Corridor (photo above) and Philadelphia-Harrisburg Keystone Corridor in preparation for revenue service deployment this fall. Two additional ACS-64s are testing at TTCI in Pueblo evaluating maximum speed runs, acceleration and braking, operating with Amtrak passenger cars, and testing the overall performance capabilities of the locomotive. Engineers are also validating the onboard computer system and software, as well as evaluating ride quality by using instruments to measure various potential issues such as noise and wheel vibrations. A fourth locomotive is being tested in a climate-controlled chamber to determine how well it performs under hot and cold temperature extremes. Amtrak selected Siemens to design and manufacture 70 of these nextgeneration electric locomotives to “provide improved reliability, efficiency, and mobility for intercity rail

passengers traveling on the Northeast and Keystone Corridors.” The ACS-64 will replace existing AEM-7 electric locomotives that have been in service for 25-to-35 years, with an average of 3.5 million miles traveled. The locomotives are being assembled in Siemens’ Sacramento, Calif., rail manufacturing plant, with parts supplied from its plants in Norwood, Ohio, Alpharetta, Ga., and Richland, Miss., and nearly 70 suppliers representing more than 60 cities and 23 states. The first units being used in the testing program rolled off the assembly line in May. In revenue service, the ACS-64s will operate Amtrak Northeast Regional trains at speeds up to 125 mph on the Northeast Corridor and also Keystone Service trains at speeds up to 110 mph. In addition, these locomotives will power all long-distance trains operating on the NEC. Once the locomotives are commissioned in the fall, production of the remaining units will ramp up for monthly delivery through 2016. The ACS-64 is part of Amtrak’s long-term, comprehensive Fleet Strategy Plan.

Joseph M. Calisi

Alstom wins Baltimore lrV overhaul contract

CSX completes Phase One of National Gateway Phase One of the National Gateway —a doublestack clearance project connecting CSX’s existing intermodal terminal in Chambersburg, Pa., and its new, state-of-the-art Northwest Ohio Intermodal Terminal hub facility, has been completed on time, and on budget. The $850 million National Gateway, one of the nation’s largest transportation PPPs (public-private partnerships), when completed will create a doublestac`k-cleared rail corridor between the Mid-Atlantic and Midwest. It is made possible through a combination of federal and state funds and CSX investment. Public funding for Phase One was supported by a federal TIGER (Transportation Investment Generating Economic Recovery) grant secured by the State of Ohio and administered by the Eastern Federal Lands Highway Division of the Federal Highway Administration. The National Gateway is currently focused on the project’s Phase Two, which will doublestack-clear the CSX corridor between Chambersburg and mid-Atlantic ports in Maryland and Virginia. Commenting on Phase One’s completion, CSX chief executive Michael J. Ward said, “We celebrate the efforts of federal and state officials in achieving this milestone, which means more jobs, a more competitive America, and a more environmentally friendly way to move freight. This is great news for our nation’s transportation infrastructure, our customers, and the communities we serve, and wouldn’t be possible without the major investment of time and resources by our federal and state partners. While this is a significant milestone, our work is not done. Working with our public sector partners, we need to finish the job and complete doublestack clearances between Chambersburg and the Ports of Baltimore and Virginia.” Since its inception, the National Gateway has been supported by governors and other public officials across six states, including more than three dozen

members of Congress, three port authorities, and dozens of global shippers, ocean carriers, business organizations, and environmental groups. Over a 30-year period, the project is expected to create more than 50,000 jobs and deliver a host of benefits including reduced fuel consumption, lower emissions, better safety, lower highway maintenance costs, and reduced shipping costs. For example, at CSX’s Northwest Ohio Intermodal Terminal, nearly 300 fulltime employees are handling hundreds of thousands of containers per year. “The National Gateway will stimulate economic activity and boost the U.S.’s competitive edge in the global economy while employing the people who will prepare us to meet future challenges,” added Ward. “CSX is proud to support this significant infrastructure investment that will help modernize our transportation system and spur growth.” “The completion of these clearances improves Schneider Intermodal’s customer experience while also providing more modal conversion opportunities for shippers,” said Schneider National Senior Vice President Intermodal Commercial Management Jim Filter. “The National Gateway helps deliver our truck-like service commitment by increasing reliability and providing

faster intermodal transit,” he added. “Thanks to the National Gateway project, the most state-of-the art intermodal yard is now located in North Baltimore, Ohio,” said Ohio Rail Development Commission Executive Director Matthew Dietrich. “The intermodal freight connections provided by the National Gateway put Ohio at the hub of moving goods in North America. ORDC is very proud to be a part of this vast public-private partnership that is boosting our nation’s economic development potential.” “The National Gateway is a great example of the benefits that public and private organizations can deliver together,” said Commonwealth of Pennsylvania Secretary of Transportation Barry Schoch. “As an engineer, I’m proud of the role played by Pennsylvania and the many other public partners in this engineering feat that will drive economic growth and development for years to come.” “The efficient and effective transportation of goods is essential to ensuring America remains strong in an increasingly competitive global marketplace,” said Congressman Bill Shuster (R-Pa.), Chairman of the House Committee on Transportation and Infrastructure. “Initiatives like the National Gateway will help strengthen Pennsylvania’s and the nation’s economy by improving the flow of commerce and creating jobs.” October 2013 Railway age 11

Update Norfolk Southern twice surpasses coal transload record, hailing its “pier without peer” in Norfolk

Twice last month, Norfolk Southern said it had notched a new record for coal transloading at its Pier 6 at Lambert Point facility in Norfolk, Va., loading a record amount of coal into a single ocean-going vessel. NS said that on Sept. 21, its employees finished loading 168,977 net tons of coking coal into the M/V Negonego, destined for use by integrated steel producers in China. NS said that is a record not only for Pier 6, but also for the entire U.S., where Pier 6 is the top performer among more than a dozen export terminals on the East, Gulf, and West coasts.

“I can give you 450 individual reasons behind this achievement,” said Jeff Yates, NS superintendent of terminals. “Our Lamberts Point employees are passionate about safety, service, and productivity. That’s how they loaded the M/V Negonego in an astonishingly fast 40 hours and 45 minutes.” The coal was shipped by Xcoal Energy and Resources in 1,592 railroad coal cars. Said XCoal CEO Ernie Thrasher, “Everyone from the miners at the Buchanan Mine to the employees at NS contributed to this record. They work every day to sustain our business, and they deserve the credit.” The previous Pier 6 loading record

reported earlier by NS was set on Sept. 17, when 166,840 net tons of metallurgical coal were loaded into the M/V China Pioneer. Pier 6 celebrated its 50th anniversary on Sept. 18, the Class I railroad said. The NS record for Pier 6 prior to last month occurred last Jan. 12, with 159,941.45 net tons loaded into the M/V Cape Dover. The previous Port of Hampton Roads record was set on Feb. 9, 1992, with 163,765 net tons loaded onto a single vessel, NS said. “Pier 6 truly is a ‘pier without peer,’” said Mark H. Bower, NS group vice president, export, metallurgical, and industrial coal marketing. “America has 25% of the world’s known recoverable coal reserves—more energy than all the oil in the Middle East. NS and our production and sales partners are the reliable team for getting that coal to the world’s utilities and coke plants.” Pier 6 opened for business in 1962. In addition to the quantity of its loadings, Pier 6 is known for speed. Most of the coal moving through Pier 6 originates in southwest Virginia, southern West Virginia, eastern Kentucky, and Pennsylvania. It is shipped to several dozen countries as well as to coastwide domestic receivers. Pier 6 accesses Hampton Roads’ deep 50-foot channel that allows ever-larger modern oceangoing vessels to make more productive and flexible use of their large holds. Some of those vessels, such as the M/V Negonego, are as long as three football fields.

Where’s my Amtrak train? Just Google it! Amtrak has introduced a new way to see where trains are and when they are expected to arrive, including information on stations nationwide, all through a new interactive train locator map built on the Google Maps interface. The new train location tracking system, available at Amtrak.com, provides near-real-time status of more than 300 daily trains, estimates of 12

Railway age October 2013

arrival times and station information, all in the context of Amtrak’s national system map. The information in the map is aggregated data collected from GPS units on each operating train and other automated systems. The data is transmitted to Google’s cloud, and then transferred to the map. The new tracking system joins

several recent technology advancements at Amtrak, including expanded and improved Wi-Fi, eTicketing, and mobile phone apps. In addition to working with Google to advance new systems for customers, Amtrak has partnered with other major industryleading brands, such as Apple and AT&T, to improve the amenities and services provided to passengers.

Kevin Sies

For Arkansas & Missouri Railroad, new power from EMD Electro-Motive Diesel has delivered three SD70ACe demonstrator locomotives to the Arkansas & Missouri Railroad—the first AC traction locomotives for the independent Class III carrier. The locomotives, EMD road numbers 1201-1203, were delivered to A&M from EMD parent company Progress Rail Services’ Mayfield, Ky., facility. EMD 1201 made its debut at the MINExpo Show in Las Vegas, Nev., painted in Caterpillar® yellow. Modifications at the Mayfield shop included a new paint design reflecting A&M’s corporate colors, and renumbering to A&M road numbers 70-72. The 4,300 traction horsepower SD70ACe integrates EMD’s 16-cylinder 710 engine, EM2000 microprocessor control system, and AC traction. They are certified for EPA Tier 3 emissions standards, and feature radial trucks and distributed power.

EMD launched thee SD70ACe in 2005 for freight applications in North American and around the world. “We selected EMD to supply our new locomotives based on the demonstrated performance of the SD70ACe,” said A&M Chairman Reilly McCarren. “To take advantage of AC traction on our mountainous route, we determined the rugged design of the SD70ACe would allow us to maintain high fleet availability at low cost. The SD70ACe locomotive is ideal for our operations and will enable A&M to retire several older locomotives, while dramatically increasing our hauling capability and efficiency.” “We’re excited to provide the first AC locomotives to be introduced into A&M’s fleet,” said Progress Rail and EMD CEO Billy Ainsworth. “We appreciate the confidence A&M has in EMD and look forward to providing

Arkansas & Missouri sees many plusses in its purchase of new EMD locomotives.

the highest quality locomotives and services to support their operations and the lowest total cost of ownership.” A&M operates 139 miles of line from Fort Smith, Ark., to Monett, Mo., serving businesses in Northwest Arkansas and Southwest Missouri, and interchanges with BNSF, Union Pacific, and Kansas City Southern.

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October 2013 Railway age 13

Test CN LNG consist with two EMD 3,000-hp SD40-2s and 30,000-gallon fuel tender.

ver its roughly 200 years of history, the North American railroad industry has been shaped by numerous technological milestones, among which are steel rail, automatic knuckle couplers, air brakes, signals, electrification, dieselization, CTC, radio communications, AC traction, gensets, and—still under development—ECP brakes and PTC. Add LNG (liquefied natural gas) to the list of potential evolutionary, if not revolutionary, technologies. But don’t expect a wholesale shift from diesel to LNG to occur overnight. The railroad industry just doesn’t work that way. How long might it take for significant adoption of LNG as a locomotive fuel? “The most recent huge increase in efficiency was the advent of the AC-traction locomotive,” says consultant Jon T. Gabrielsen. “Yet as of now, only about 17% of the entire installed base is AC, and it has taken 20 years to build up to the 5,000-plus units that are AC, out of about 30,000 total—an average of adding 250 AC locomotives to the installed base over those 20 years. To their credit, during the period of 1994-1999, the railroads added over 500 AC locomotives per year. But those were very heady times in the macro economy, the roaring ’90s. And even though the first AC locomotives were put into service in 1993, they had been developed and were being pushed by the OEMs as early as the late 1980s, when EMD licensed Siemens AC technology. If the adoption of AC locomotives is a valid proxy, railroads take about five years to decide if they want to go with a significantly changed technology and then adopt at a rate of about 0.8% to 1.0% per year of the total installed base thereafter. Even if they doubled that adoption rate for LNG, it would still take a very long time to be significant.” “The challenges of LNG are capital investment, the potential impact on maintenance costs, the LNG infrastructure costs, the logistics of getting LNG to a fueling site and into the tender car, and the possibility of compromising the fuel cost savings by over-investing,” says Ricardo Strategic Consulting Principal Mark S. Kuhn. 14

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Programs to evaluate LNG as a locomotive fuel are expanding throughout the rail industry, led by such stakeholders as GE Transportation, Electro-Motive Diesel, BNSF, Union Pacific, CN, Clean Energy Fuels, Chart Industries, Westport Innovations, Waste Management, Gaz Métro, and many others. During two separate conferences last month— the 2013 GE Transportation/Norfolk Southern Railroad Sustainability Symposium, and the High Horsepower Summit in Chicago—industry experts delved into current LNG projects, and the potential of this (for railroads) relatively new alternative to diesel fuel. In general, “there are huge environmental and economic benefits associated with going to LNG,” said Association of American Railroads Assistant Vice President Environmental and Hazmat Bob Fronczak. “We believe that LNG’s greenhouse gas emissions will be lower than diesel fuel, able to meet Tier 4 standards, though there is no data at present to support this.” In terms of reduced fuel cost, a savings of up to $200,000 per year per locomotive (at current LNG prices) is estimated. The cost of fuel drives everything. The industry currently spends about $9 billion on diesel fuel annually. Can LNG be hedged? Says Jon Gabrielson, “One can just as easily hedge the price of diesel as the natural gas that is made into LNG. Diesel hedging, like jet fuel hedging, already exists and has for a very long time. Hedging isn’t free, and a gamble that when one loses is very costly. It is a bet on what the future price of what a commodity will be vs. what you pay for the futures now. The impact of changing natural gas prices is tiny because most of the cost is in the fixed cost of liquefying and in the logistics.” Development of an industry-standard fuel tender is under the auspices of the AAR Natural Gas Fuel Tender Technical Advisory Group (TAG), a joint effort of the AAR Locomotive, Tank Car, and Equipment Engineering Committees. This task force is tackling regulatory and safety issues. For example, under current FEMA rules, LNG is not

All illustrations courtesy Association of American Railroads

By william C. VantuOnO, editor-in-Chief

A closer look At lNG the industry has embarked on an intensive evaluation of what could become the future of motive power. Here’s what the experts have to say. permitted to move by rail, unless there is an FRA waiver. The committee has met with locomotive builders as a group, and separately, and is working with the FRA to develop national standards for LNG. More than 100 potential failure modes have been identified and submitted to FRA and Transport Canada. Unlike household natural gas, the odorants (mercaptans) that assist in the detection of a leak cannot be used in a locomotive application. Instead, methane detectors must be in place to detect an LNG leak, because LNG is colorless and odorless. The most vulnerable spots for a leak would be the connection from the fueling facility to the fuel tender, and from the fuel tender to the locomotive. There are several methods to deliver LNG fuel to the locomotive prime-mover. All require the LNG, which is cryogenic methane chilled to –260 degrees F with other elements (water, propane butane, etc.) removed, to be vaporized (heated to a gas). This process takes place on the fuel tender. In the engine’s power assemblies (cylinders), diesel fuel, which ignites under high compression, is used to ignite the LNG. This method provides some operational flexibility, depending upon the LNG/diesel ratio. High pressure direct injection (HPDI, at 5,000 to 8,000 psi), and low pressure (125 psi) fuel delivery methods are being looked at. HPDI fuel delivery requires port or direct injection at the cylinder; this method is purported to save anywhere from 40% to 60% in fuel costs. The mission of the AAR Natural Gas Fuel Tender TAG is “to develop standards for future LNG fuel tenders for the railroad industry to support the use of LNG as an alternative locomotive fuel.” The TAG, which serves as an AAR/industry interface, is working on: • Safety, crashworthiness, and environmental protection. • Tender design and construction. • Tender-to-locomotive interfaces and connections. • Tender-to-refueling infrastructure interfaces and connections.

• Tender interoperability and interchangeability between railroads. • Maintainability. • Development of dual-fuel and gas-fuel locomotives and tenders. • Soliciting feedback from relevant suppliers. • Communicating and updating the NGFT (Next-Generation Fuel Tender) standards process to suppliers. Class I tests rampIng up

LNG test programs at BNSF and Union Pacific are expected to start in the fourth quarter and last at least one to two years. EMD Director, Engine Systems Martha Lenz reports that an HPDI stationary test is up and running. EMD is supplying three test locomotives to BNSF, and with fuel tender supplier Westport and Gaz Métro (one of the BnsF mK1200g equipped with a Caterpillar 3516 natural gas largest natural gas distribspark ignition engine. utors in Canada), is

October 2013 Railway age 15

lNg

participating in a demonstration on CN. CN’s current LNG development program, which began in 2012, uses two EMD 3,000hp SD40-2s equipped with modified 16-645E3 engines. The engines have been converted to LNG using available kits. A 30,000-gallon LNG tender (built in 1992 for BN and on loan from BNSF) was modified for this program, which Transport Canada approved. The tender was outfitted with LNG piping and hose connections; a locomotive coolant loop for gasification, filling, and purging arrangements; LNG pumps; a power supply; and other equipment. CN in 2014 will be taking its demonstration program one step further with main line testing beginning in 2014. It will evaluate: • LNG thermal efficiency with a high-horsepower locomotive. • Mileage range reliability. • Fuel tender operations flexibility with CN’s fleet operations productivity requirements. • EPA and Transport Canada emissions compliance. • LNG substitution ratio capital cost control. • Maintenance cost controls and maintenance facility impact. • Safety and regulatory AAR interchange standards. • Tender design and construction. • LNG supply logistics. • LNG long term price forecasts. • LNG refueling efficiency. According to GE Transportation Locomotive Business Operations Executive Graciela Trillanes and Dual-Fuel Engine System Leader Eric Dillen, GE Transportation’s LNG technology (currently under test at its Erie, Pa., plant) is based upon a mix of 80% LNG, 20% diesel, using an existing ECO engine. This ratio allows the engine to revert to 100% diesel in the event of an LNG-related failure or the unavailability of an LNG stationary or mobile refueling station. At a 95% LNG/5% diesel ratio, reverting to 100% diesel is not possible. A 100% LNG engine would require a spark at the cylinder (and major modifications to existing engine technology), since LNG does not ignite under compression. Thus, the “dual fuel” engine appears the way to go, at least until

Railway age

October 2013

LNG fueling solutions can be deployed industry-wide. Also, as an initial step, deploying 80% LNG locomotives would be an easier, more cost-effective solution for the railroads, according to Waste Management Sustainability Services Director Tom Carpenter. Fuel tenders can be configured in two forms: a 10,000gallon ISO tank, or a 25,000-gallon tender that closely resembles a tank car. An LNG-powered freight train using 25,000-gallon LNG fuel tenders should be able to operate, for example, between Los Angeles and Chicago one-way without a refueling stop, improving locomotive utilization. The ISO LNG tank, though of lower capacity, offers more operational flexibility and potentially lower cost. At 40 feet in length and enclosed in a steel frame, the ISO tank can be mounted in a modified well (doublestack intermodal) car, and can be easily removed when empty and replaced with a full tank transported by truck, thus eliminating the cost and Above: EMD 16-654E3 engine with LNG modifications for CN. Below: The AAR Natural Gas Fuel Tender Advisory Group’s proposed LNG fuel tender design.

lNg

logistical constraints of a dedicated LNG fueling station. For a purpose-built 25,000-gallon fuel tender, for which the AAR is developing a design, the most modern refueling equipment will provide a refueling time of 30 to 45 minutes, about 400 gallons per minute, according to Clean Energy Fuels Assistant Vice President LNG Production & Rail Koby Knight—longer than a diesel refueling stop, but required less frequently. Fuel tender safety is of course a prime consideration. In general, LNG is safer than diesel or gasoline, since it does not ignite in liquid form. If it spills, it vaporizes instantly (at –100 degrees F) and dissipates. Dissipation is affected by such factors as humidity and wind. In gaseous form, LNG will ignite only under very specific temperature conditions (at least 1,000 degrees F) and oxygen concentrations. LNG cryogenic tanks, supplied by companies like Chart Industries and Westport Innovations, are highly crashworthy, built to withstand 9 Gs of impact force. They are constructed as a double tank—an inner tank (typically stainless steel, though aluminum is sometimes used) encased in a flexible material, and enclosed in a carbonsteel or stainless steel outer tank. A vacuum is created in the space between the inner and outer tanks. Historical perspectives

LNG has been in use in the transportation industry (mainly trucks and buses) since the mid-1990s, and was tested on the Burlington Northern Railroad and the Union Pacific in the 1980s and 1990s. (The fuel tenders being prepared for BNSF’s current tests with GE and EMD locomotives are BN’s original tenders from those years, rebuilt and modernized.) Union Pacific sponsored developments at EMD and GE between 1992 and 1998, using two EMD SD60s and two GE Dash 8s and two fuel tenders. These units were tested at the OEMs, but the final engine technology was not completed, and the project was shelved in the late 1990s. BN had a

Between 1992 and 1998, Up sponsored lNG programs at eMD and Ge, using two sD60s and two Ge Dash 8s (pictured)..

development program with ECI (Energy Conversions Inc.) from 1988 to 1996, using two EMD SD40-2s with two tenders. These units operated in Powder River Basin coal service from 1991 to 1996 between Wyoming and Wisconsin. The LNG hardware is still marketed by ECI. In 1994, Morrison-Knudsen (now the MotivePower Industries division of Wabtec Corp., Boise, Idaho) built four LNG-fueled MK1200G switchers, two each for BN and UP. These 1,200-hp, 100% LNG units were equipped with a 16-cylinder Caterpillar 3516 natural gas spark ignition engine that delivered a 25% to 35% BTU/HP savings over a diesel-fueled GP38-2. All four eventually went to BNSF; they worked in Southern California over the past decade, and were refueled by LNG tank trucks. LNG, said Clean Energy’s Knight, “is a sustainability and energy security initiative. The way to make LNG work for the rail industry is through state-of-the-art engine technology and the expertise required for it. The engine technology has come of age. What needs to be carefully looked at is the business aspect: What is the cost per hour of operating an LNG locomotive?” CN says the estimated cost of a fuel tender is $1 million— “a potential complication. The economic analysis lies with the tender.” Operationally, “unit coal trains are a tight operational process and may make the most sense, at least initially, for LNG. And the fastest way to refuel a tender is with an LNG truck. Adding an LNG plant is costly and doesn’t make sense. Using a truck lessens local community concerns, as it does not require pipes, etc. And how many people will be needed for switching and refueling operations?” LNG locomotives could be in widespread use by 2016 or 2017. Whether that comes to pass will depend upon all the variables discussed above. RA October 2013 Railway age 17

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ailway ge R A RAILROAD FINANCIAL DESKBOOK 2014

Contents

DB1

A TENTATIVE MARKET By Tony Kruglinski

DB9

DIREcToRy oF FINANcIAL PLAyERS

RAILROAD FINANCIAL DESKBOOK 2014

A tentative market

By Tony KruglinsKi, Financial Editor

Norfolk Southern

to the 2014 edition of the welcome Railroad Financial Desk Book. As regular readers know, every year we take a look back at issues

and events that have impacted the current year in railcars and their financing, and we take a look forward at trends that are likely to have an impact on the coming year. In last yearâ&#x20AC;&#x2122;s Desk Book, the path forward was pretty clear, all eyes and minds were on the business of hydraulic fracking and the surge of Crude by Rail (CBR) and its impact on all sectors of the rail equipment industry. This year, the focus remains on CBR and the additional rail served requirements of hydraulic fracking, but the picture of CBR is clouded by the derailment of a 72-car train in Lac-MĂŠgantic, Quebec and the deaths of 47 people from the resulting explosions and fire. Questions raised in the immediate wake of the tragedy remain unanswered, and their impact on CBR as yet undetermined. The question of potential regulatory changes in tank car design looms large considering the growth in CBR volumes on a year over year basis.

The year-over-year increases in CBR are staggering even to industry veterans. While the percentage represented by CBR of total North American rail loadings remains relatively low (3% in the 2nd quarter of 2013) the incredible growth and the growth potential continues to be the focus of the railcar backlog and of financial parties making investments in the industry. As Railway Age reported in July, tank cars represent 83% of the total current backlog for North American railcar production. Despite a small decrease in the total number of railcars to be built in 2013 vs. 2012 (roughly 59,000 in 2012 against an estimate of 52,500 for 2013), experts predict that the continued demand for tank cars plus growth in markets served by other car types (grain, steel, autos, etc.) will keep the railcar backlogs in the 60,000 units or more range for the remainder of this economic cycle. One weak point in the railcar marketplace is the current market for coal equipment. Recent pronouncements from the EPA and President Obama against the building of new October 2013 Railway age DB1

RAILROAD FINANCIAL DESKBOOK 2014

DB2

Railway age

October 2013

harvest and a strong soybean harvest) remain tepid. Small cube hopper cars, backed by the strength of hydraulic fracking, remain robust and in demand. Boxcars and mill gondola railcars seem to be in a midrange of not too strong and not too weak. Centerbeam flat cars, while off the floor, are still waiting for the economic housing boom that is going to return those cars to their former glory (many lessors would like see that also). Large cube hoppers for plastic pellets remain strong heading into a period of long term growth. Coal cars, as mentioned above, remain weak. up, down, or sidEways?

The point is clear. A few markets, tanks and small cube hoppers primarily, are leading the manufacturing and rental markets. The remainder of the market is trending up, down, or sideways depending on the commodity and the timing. Broad-based, demand-driven strength in the manufacturing and lease market for all railcar types that historically has been the hallmark of a build year of greater than 50,000 railcars is not in evidence right now, and is unlikely to make an appearance in the near term. What does this say about equipment values and the market for investment in equipment? Logically, readers of this magazine might think that the market schism in rental rates is present in equipment values, as the fair market value would reflect the current rental market for the equipment. Sources have told us that fair market values for many types

Bruce Kelly

coal fired generating facilities and stating emissions limits on existing generating plants have not done anything to lift concerns about the fate of what has been one of the backbones of railroad loadings. Car prices are down, and in spite of a recent uptick in demand, rental rates remain low. This has impacted equipment values and will continue to impact construction of coal cars for the foreseeable future. Ultimately a mix of age, scrapping, and derailment related retirements will decrease that fleet to the size it needs to be to haul the coal that will continue to be shipped in the eastern and western U.S. for power generation, industrial production, and export. While a number of cars have moved back into service (at last count there were an estimated 151 mostly privately owned unit coal train car sets in storage in the West and 24 unit coal train cars sets in storage in the East), supply still exceeds demand. (A unit train is a group of between 110-135 cars that comprise a single train. Coal trains tend to be shorter in the East and longer in the West.) So how is 2014 shaping up for investors, owners, and operators of rail equipment? In the words of one lessor, the market today is tentative. The rental market has been and continues to be dichotomous: on the one hand, in spite of some modest pullbacks on some of the higher priced leases for CBR tanks, the tank car market overall remains robust for CBR and for other tank car types. Grain car lease rates (heading into what has the potential to be a record corn

RAILROAD FINANCIAL DESKBOOK 2014

of equipment are high even for those assets serving weaker commodity markets. Investors in these assets may be anticipating forward economic strength that will allow those assets to deliver the expected return on investment. In addition, as Patrick Mazzanti, President of Railroad Appraisal Associates noted to me as I was preparing this article, “Replacement costs for new equipment are driving the used car market higher.” New car pricing continues to be favorable to the manufacturers. The current price surge has been in place since railcar production increases began in earnest in late 2011. With new car production levels above the 50,000 car per year level and the railcar backlog out into 2015 for some car types, buyers of cars have little (if any) price leverage. In addition to a base cost that creates sticker shock for some buyers, new equipment buyers are bearing the risk of increases in commodity prices, component prices, and transportation rates. Add this together and it’s not hard to see why used car prices remain robust. So we have a complex investment picture for parties that look to deploy capital into rail assets. Decisions about asset purchases and residuals are more difficult in a complex market. The difficulty of the environment is combined with a hyper-competitive market for investment. As noted in the 2013 Desk Book, banks and bank leasing companies were more frequently stepping into leases for equipment that were seven to ten years in length and in some cases even shorter. This puts the banks in the position of taking real residual risk on the assets they are financing. Taking residual risk has traditionally been the field of expertise for operating lessors. As interest rates rise over time (and the Federal Reserve tells everyone they will), what will the next “play” be for the banks and end users of rail equipment that have enjoyed access to the cheap money offered by the Federal Reserve?

new car pricing continues to be favorable to manufacturers. The current price surge has been in place since railcar production increases began in 2011.

(bulk handling in certain grain markets) barging. Low interest rates are a strong positive behind the continued push for improvement. The ability to borrow at low rates along with the health of the railroad industry continues to drive interest and investment demand in railroads. Overall, prospects for a positive 2014 seem in place. If the U.S. economy shows strength and the general freight market picks up, the combination of investments in infrastructure and increasing industrial capacity all bode well for equipment values, railcar production, and overall demand. (An improving global economy wouldn’t hurt either, but that remains to be seen.) Mix that with continued strength in the businesses serving and benefiting from CBR and hydraulic fracking, and you can enjoy the ongoing cyclical expansion and strength of this cycle in this great industry. Here’s to continued success for 2014.

Norfolk Southern

updaTE on EquipmEnT Financing

The railroads also need to get their “props” as we contemplate the relative health of the industry overall. Railroad investments in infrastructure in 2012 were huge: $25.5 billion (or a total of almost $590 billion since 2000). These investments in track, signaling, terminals, and equipment continue to stoke the fires of the “Rail Renaissance.” These investments have supported and continue to support rail’s ability to take away market share in key growth markets (such as intermodal) vs. trucking and

When 60,000 railcars get built, who pays for all of them? For 2012 and into 2013, the answer has been a little bit of everyone. Certainly, the majority of the financing opportunities went to the operating lessors, both those owned by the manufacturers and those that are stand alone entities. As referenced in the earlier article, 2013 was a coming of age for bank involvement in shorter term railcar leasing. Frequent readers of Railway Age’s “The Financial Edge” column have heard the news: Bank lenders have taken October 2013 Railway age DB3

Bruce Kelly

RAILROAD FINANCIAL DESKBOOK 2014

RAILSOLUTIONS, INC. RAILSOLUTIONS Provides Quality Consulting and Advisory Services to Financial Institutions, Railroads, Leasing Companies and Shippers.

RAILSOLUTIONS, INC.

James D. Husband, President 1307 Jamestown Road, Suite 101; Williamsburg, VA 23185 (757) 903-4606 Fax: (757) 903-4705 jhusband@railsolutionsinc.com www.railsolutionsinc.com

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RailSolutions Offers: • Railroad Equipment Appraisal and Valuation Services • Portfolio Analysis and Lease Valuation Services • Equipment Remarketing • Railcar and Locomotive Inspections, and Technical Services • RailSolutions Publishes the Investors’ Guide to Railroad Freight Cars and Locomotives – A comprehensive reference manual covering market and valuation data on virtually all types of railcars and locomotives used in North American rail freight services.

RAILROAD FINANCIAL DESKBOOK 2014

a long view of equipment and the rail marketplace and are making shorter term investments in equipment lease— sometimes taking on terms of less than seven years. For parties looking for the most cost effective solution, I hope that continues. This is not to minimize the role that operating lessors are playing in this market. Some lessors, those who were savvy enough, sophisticated enough, or lucky enough (or all three) to make investments in cars on a speculative basis (speculative in this case means making commitments to purchase railcars without having leases in place prior to making a commitment to purchase) have been well rewarded. Other lessors, who have bought equipment and leases in the secondary market, have in many cases fared well also. Parties that made purchases of small-cube covered hoppers or tank cars coming off lease in 2012 or in 2013 have had reason to celebrate. Companies that made purchases of centerbeam flat cars or coal cars with similar expirations may wonder what they were thinking at the time of investment. The operating lessors are healthy overall. The number of companies looking to enter the leasing space certainly speaks to that.

The operating lessors are healthy overall. The number of companies looking to enter the leasing space certainly speaks to that.

service. Ellman went on to note that in the four-year window of 2012 through 2015, it is projected that roughly 74,000 tank cars will be built. The current backlog for tank cars supports this projection. Whether you are a casual investor or a direct lender into the energy space, all parties are aware of the uncertainty that surrounds pipeline development. It’s the multi-billion-dollar three part question: When will they be built, how much crude will they deliver, and how will it impact CBR? I don’t think you’ll find anyone, this writer included, who will tell you that CBR is a short term play. It would not surprise me, however to see some pullback from investors as aggregate residual exposure reaches high levels. numBEr ThrEE: The impact of rising interest rates on how railroads acquire equipment. The Class I railroads, profitable and flush with cash and the ability to use tax depreciation, have moved away from U.S.-based tax leasing as the pricing on their medium term notes (MTN) has been attractive enough to have them buy equipment outright. As rates and the total MTN costs rise, longer term leasing might return to favor, especially considering that the larger banks have had some time to manage down their exposure to marquee credits like TTX, UP, BNSF, CSX, and CP (lest anyone perceive a slight, NS and CN have historically been direct purchasers of equipment). Now, with the positive trend that has brought KCS in line with the credit quality of the other Class Is, there are plenty of opportunities for banks to look to the largest equipment buyers as potential lessees.

So what’s new? Three things to watch: numBEr onE:

William C. Vantuono

The impact of rising interest rates on the presence of banks in the shorter term leasing marketplace. How will they respond? By one back of the envelope calculation, an increase of 1% in treasury rates could equal an increase of $5.00 per car per month in lease rate from a lessor. A return to interest rate levels of 2005 (when the ten year treasury rate was as high as 4.6% versus 2.7% or so today), for example, may cause bank investors to reconsider their residual position to take a larger residual, to increase term to stay competitive, or to risk losing new business back to the operating lessors that commanded it in the first place.

numBEr Two: Concentration risk for CBR and the markets that serve the business of hydraulic fracking. At the Rail Equipment Finance conference in 2013, Thomas Ellman, EVP and President Rail North America for GATX Corp., noted the national tank car fleet required 10,000 cars at most (and less than 10,000 in most years) to be produced each year to replace cars that are destroyed or removed from October 2013 Railway age DB5

Bruce Kelly

RAILROAD FINANCIAL DESKBOOK 2014

810-714-4626 • www.progressrail.com/leasing

PREL_Half_PR_send3.indd 2

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RAILROAD FINANCIAL DESKBOOK 2014

What’s the attraction? Besides the credit quality and the momentum enjoyed by the industry in general, the railroads are buyers of more universal equipment such as jumbo grain hoppers and mill gons, which may give some investors comfort in a CBR-centric environment. As one bank leasing veteran associate pointed out to me, it will be a perfect storm of opportunities for the railroads to pick and choose the manner in which they acquire equipment in a rising interest rate environment. The fall brings with it the changing colors of the leaves, the onset of some cooler breezes, new hopes for the permanently purgatorial New York Jets fans, and a typical cadre of portfolio sales. I can’t comment on any of the first three, but I do note that the hope for increasingly high valuations shows the faith that underpins the market for rail equipment. The dollar volume of portfolio sales is a terrific barometer on the health of the industry. In good times there are always parties looking to “cash out” on purchases made at a good time or at a below market price. This year seems to be shaping up in similar fashion. Who are the buyers in these big sales? The smart money tends to favor companies that have a history of taking strong residuals and making good on their valuation of those assets over time. Historically, those bets seem to pan out even if

achieving the results takes a few extra years to work off the robust price associated with some acquisitions in a competitive market. As North American rail is an attractive sector in the domestic and foreign market, don’t rule out some new player with deep pockets looking to make a splash entrance into the rail financing pool. Keep your ear to the track: Large acquisitions are usually followed by some sales as asset pools are tailored to the liking of the new management team or to generate some cash to pay down some acquisition debt. ThE rEgulaTory EnvironmEnT For cBr TanKs

One thing that is great about the railroad industry is that you frequently hear about the quality of the people. This writer has always found that to be true. It is certain that the tragedy in Lac-Mégantic, Quebec, gave the entire industry pause as the industry and the people that derive their livelihood from it take safety very seriously. That concern for safety is spearheading the efforts to determine how to insure the safest environment for tank cars and CBR. The growth potential and longevity of CBR require defining the best manner in which to handle any changes in tank design that may be necessary.

Railonomics

[reyl-uh-nom-iks] Definition: Optimized rail solutions from CIT Rail, based on industry-leading leasing and equipment management expertise. CIT Rail has a long-standing commitment to providing leasing solutions to rail shippers and carriers. We leverage deep experience and one of the youngest, most diversified railcar and locomotive fleets in the industry. Our solutions free up capital for your growth priorities, increase efficiencies and reduce out-of-service time.

Visit citrail.com or call 312-906-5701

ATTRACTIVE ASSETS • FLEET MANAGEMENT CAPABILITIES • CAPITAL PRESERVATION

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RAILROAD FINANCIAL DESKBOOK 2014

In spite of how tragic the events in Lac-Mégantic were, the derailment offers no concrete advice on changes that may be required in tank car design. I have spoken with industry veterans that ship all types of commodities, including TIH (toxic inhalation hazard) commodities across the nation. To paraphrase what has been communicated to me, derailments at 70 mph are extremely rare and there is no car being built today that could withstand the impact force of a collision at that speed. In last year’s Desk Book, there was an article about the change in tank car design for the standard CBR car. It is possible that the current car design might be the long term designated car type for CBR. It is possible that the car design will be modified or refined to add additional safety enhancements. Cars that do not meet the current standard, including having the correct thickness of the steel at the head of the tank, may be restricted from CBR service entirely, but one would expect at the least a limitation on their use in CBR (or ethanol) unit train service. From what we hear in the market, there does not seem to be support for a jacketed car (a tank surrounded by insulation and a second metal shell) and its impact on the national fleet or total fleet efficiency. Implementation of a jacketed car design would be a lengthy and expensive

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process. The tank car committee providing recommendations on changes in design that might be implemented by the FRA gives fair and careful consideration to all aspects of the issue, from derailments caused by human error (as seems to be the conclusion in Quebec) to derailments caused by track conditions to the potential for avoidance of future tank puncturing. From the outside looking in, the events in Quebec do not seem to have caused a shift in the momentum for pipeline implementation. Here’s the tie-in between the events in Quebec and the marketplace for tank cars. As investors in railcars and especially in tank cars contemplate their next steps, there are certainly concerns about the potential for overbuilding. These concerns exist, as they would in any tight market, in an industry that chronically overbuilds during strong economic cycles. The impact of pipelines for crude and regulatory changes that may occur is not yet known. For leasing and finance veterans, it’s part of the ballet that goes on as the industry moves through five- or six-year economic cycles. Most of them adopt a “Keep Calm and Carry On” attitude as they work to do the best for their companies. These veterans may decide that the exposure is too great and pull back on investment. In the mean time, adopting their current approach sounds like pretty good advice.

railroad Financial dEsKBooK 2014

2014 Directory FinancE companiEs

CIT RAIL

30 South Wacker Drive, Suite 3000, Chicago, IL 60606; Tel.: 312-906-5700. CIT Rail provides financial solutions to the bulk freight transportation marketplace by closely working with freight shippers, receivers, carriers, intermediaries and facility operators across all modes to customize financial solutions to each customer’s individual needs. As a full service lessor and owner of one of the youngest, most diversified fleets of rail assets in North America, CIT Rail brings unparalleled asset management expertise and commitment to the transportation sector. CIT Rail owns and manages a fleet of over 100,000 railcars and more than 500 locomotives.

COMPASS CAPITAL CORPORATION

An international asset finance and management company located in San Francisco and Chicago. The company’s major emphasis is arranging and acquiring lease investments, primarily in transportation equipment. We provide customized leasing services to finance railcars and locomotives, capital and/or operating leases, portfolio acquisition services. Peter Urban, Vice President–Rail Marketing, 200 S. Wacker Drive, Suite 3100, Chicago, IL 60607. Tel.: 312-674-4742; Fax: 312-421-2742; Email: purban@compasscapitalcorp.com.

PROGRESS RAIL EQUIPMENT LEASING

15173 North Road, Fenton, MI 48430; (810) 714-4626. Trent E. Marshall, VP & COO Maintenance of Way. The largest lessor of maintenance of way equipment in North America is a full-service leasing firm offering a host of programs and services specifically tailored to meet your exact financial needs. With more than 50 years of specialized experience in the railroad industry, our experts’ dedication and uncompromising focus on quality sets us apart from the competition. FCM develops leasing programs to cut equipment costs and provides leasing structures that are tailored to meet the rail industry’s specific and ever-changing needs. Visit us on the web at www.progressrail.com/leasing. arrangErs

THE DAVID J. JOSEPH COMPANY

300 Pike Street, Cincinnati, Ohio 45202; Tel.: 513-4196200; Fax: 513-419-6221; Trey W. Savage, VP Rail Group; Ken Roseberry, Director Rail Equipment Group;

Keith Kelsey, Ken Johnson, and Matt Siemer, Regional Sales Managers; Tom F. Pellington, Sr. Director Transportation Services; Steven R. Skeels, Chief Mechanical Officer; and Ann Edwards, Mgr. Retired Rail Assets (502-212-7365). The David J. Joseph Company’s Rail Equipment Group is a full-service transportation company providing a broad range of services throughout North America. Single investor, leverage leases, freight cars, portfolio evaluation, remarketing fleet management, purchase and sale of portfolios, and private fleet management. Other services include railroad car dismantling for scrapping and parts reclamation.

RAILROAD FINANCIAL CORPORATION

676 N. Michigan Avenue, Suite 2800, Chicago, IL 60611; Tel.: 312-222-1383; Fax: 312-222-1470; Anthony D. Kruglinski, President, Email: tkruglinski@railfin.com; David G. Nahass, Senior Vice President, Email: dnahass@ railfin.com; William J. Geiger, Vice President, Email: wgeiger@railfin.com. RFC represents domestic and international clients in the following areas: debt and lease financing of all railcar types including coal cars, tank cars and covered hopper cars for sand and plastics; railcar and locomotive fleet acquisitions and sales; lease brokerage; mergers and acquisitions; equity and debt financing of rail property acquisitions, fleet and lease restructurings and/or refinancing. RFC also provides continuing education for the industry. lEssors

THE ANDERSONS RAIL GROUP

Rail Car Division, 480 West Dussel Dr., Maumee, OH 43537; Fax: 419-891-2749; Rasesh Shah, President Rail Group, 419-891-2958; Chuck Brown, Vice President Sales, Tel.: 419-891-6386; Email: chuck_brown@andersonsinc. com. Formed in 1989, The Andersons Rail Group has enjoyed steady growth in the number of cars leased and managed from Maumee, Ohio. Currently, our portfolio consists of approximately 24,000 cars and 150 locomotives. To better serve our customers, The Andersons Rail Group operates a large fleet of mobile units, 17 repair facilities, and a steel fabrication facility to produce custom rail components. We understand the importance of having extensive knowledge about taxation, government regulations and railroad requirements. As a valued customer of The Andersons Rail Group, you can expect reliable equipment, flexible lease options and superior customer service. Please visit our website at: www.andersonsrail.com. October 2013 Railway age DB9

RAILROAD FINANCIAL DESKBOOK 2014 lEssors cont.

C.K. INDUSTRIES, INC.

P.O. Box 1029, Lake Zurich, IL 60047-1029; Tel: 847-5501856; Fax: 847-550-1854; e-mail: rmeyers@ckrail.net; Richard E. Meyers, President. C.K. INDUSTRIES, a privately held corporation, began its U.S. leasing operations in 1980, and offers its services to shippers, short line, regional and Class I railroads in North America. New investment opportunities up to $10MM of both new and used types of freight cars will be considered. Our existing lease fleet offers a wide variety of car types to meet your lease requirements. We offer mid to long terms, either on a full service or triple net basis.

THE DAVID J. JOSEPH COMPANY

300 Pike Street, Cincinnati, Ohio 45202; Tel.: 513-4196200; Fax: 513-419-6221; Trey W. Savage, VP Rail Group; Ken Roseberry, Director Rail Equipment Group; Keith Kelsey, Ken Johnson, and Matt Siemer, Regional Sales Managers; Tom F. Pellington, Sr. Director Transportation Services; Steven R. Skeels, Chief Mechanical Officer; and Ann Edwards, Mgr. Retired Rail Assets (502-212-7365). The David J. Joseph Company’s Rail Equipment Group is a fullservice transportation company providing a broad range of services throughout North America. Single investor, leverage leases, freight cars, portfolio evaluation, remarketing fleet management, purchase and sale of portfolios, and private fleet management. Other services include railroad car dismantling for scrapping and parts reclamation.

PROGRESS RAIL EQUIPMENT LEASING

FIRST UNION RAIL

One O’Hare Center, 6250 N River Road, Suite 5000, Rosemont, IL 60018; 847-318-7575; Fax: 847-318-7588; Rich Seymour, Vice President Sales and Marketing. First Union Rail, a Wells Fargo company, is one of the largest, most diverse railcar leasing companies in North America. We have a solid industry reputation for providing superior equipment and exceptional service. First Union Rail offers a variety of customized finance and operating lease structures, as well as marketing and transportation management services. Let First Union Rail’s team of professionals help find the right equipment to solve your transportation needs. DB10

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FLAGSHIP RAIL SERVICES, LLC

300 South Riverside Plaza, Suite 1925, Chicago, IL 60606; 1-888-4RAILCAR. Gene Henneberry, President & CEO, (312) 559-4801; Tim Johnson, Senior Vice President Leasing, (312) 559-4805; Patrick McGrath, Vice President Leasing-Southeast, (312) 559-4821; Jeffrey Griffin, Vice President Leasing -Northwest, (312) 559-4820; Jeff Wilkison, Vice President Leasing – Southwest, (312) 559-4808; Mark DePaul, Vice President Leasing – Northeast, (312) 559-4822. Flagship Rail Services is a full service operating lessor, invested in all tank and freight car types, offering a broad selection of equipment leasing and financing products for the North American rail industry. Flagship Rail can structure a solution for all of your rail equipment needs, short and long term, full service or net leases, sale/leaseback, or portfolio acquisition. Visit us at www.flagshiprail.com.

GATX CORPORATION

Thomas A. Ellman, President, Rail North America, GATX Corporation, 222 W. Adams Street, Chicago, IL 60606; Tel: 312-621-6200 Fax: 312-621-6546 GATX is a leader in the rail leasing industry with more than a century of experience, preeminent expertise in specialized railcars, and a growing international presence. GATX meets shipper and railroad needs with one of the largest lease fleets of tank and freight cars and locomotives in the world. We provide our customers with a unique mix of financial (global financing, valuation, structuring, leasebacks, joint ventures, partnerships) and mechanical (regulatory, maintenance, engineering, cleaning, inspection) services in North America. Contact via www.gatx.com or 1-800-428-8161.

GE CAPITAL, RAIL SERVICES

161 N. Clark Street, Chicago, IL 60601; Tel.: 800-4456126; Email:railinquiries@ge.com; Website: www. gecapitalrail.com. GE Capital, Rail Services offers specialty financing with deep rail industry experience and a highly diversified equipment portfolio. With over 100 years of experience, Rail Services offers locomotives and a variety of railcars to railroads and industrial companies which ship by rail across North America. A suite of repair and maintenance services, through the use of owned and authorized contractor shops, helps ensure quality and scheduling flexibility. Customers benefit from our deep technical and regulatory experience to make financial fleet decisions with confidence. Please visit our website at www. gecapitalrail.com or call us at 800-445-6126.

GREENBRIER LEASING COMPANY

One Centerpointe Drive, Suite 400, Lake Oswego, Oregon 97035; 800-343-7188; Fax: 503-968-4383; Email: Marketing.Info@GBRX.com; Website: www.GBRX.com. Contacts: J.T Sharp, President; Larry Stanley, Vice President; Tom Jackson, Vice President, Marketing.

railroad Financial dEsKBooK 2014

Greenbrier Leasing Company provides a full range of operating and financial leases of railroad freight cars to shippers, shortline, regional, and Class I railroads. In addition to owning a fleet of more than 10,000 cars, we develop financial structures customized to meet a multitude of customer requirements including; full-service, net, and per diem leasing structures, with both short-term and longterm options, sale-leaseback and like-kind exchanges as well as upgrade and modification programs. Our approach allows customers to meet current needs and position their business to capitalize on future opportunities. The Greenbrier Companies, Inc. manufactures a full range of freight cars designed for the carriage or intermodal containers, automotive products and vehicles, grain and agricultural products, forest and steel products, sand and cement, plastics and solid waste. We operate one of the largest repair and refurbishment networks with nearly 40 facilities strategically located facilities in North America, providing railcar repair, maintenance, refurbishment, wheel and axle services and railcar component parts. Greenbrier is also a leading provider of rail asset management services with a variety of proprietary software productivity tools and one of the most experienced teams in the industry.

HELM FINANCIAL CORPORATION

505 Sansome Street, Suite 1800, San Francisco, CA 94111; Tel: (415) 398-4510, Fax: (415) 398-4816; Brad Wind, Executive Vice President-Director of Marketing; Ed Garvey, Senior Vice President of Marketing & Acquisitions; Francois Bernard, Senior VP Mechanical Locomotives, Marty Giubardo, VP Equipment Sales; Full service rail equipment leasing company offering railcars and locomotives for lease and/or sale. For more than 30 years, Helm has offered operating leases of freight railcars and locomotives to railroads and shippers throughout North America. In addition, Helm Rail Equipment Services specializes in selling locomotive parts to the railroad industry. Helm’s diverse fleet of railcars and locomotives is available to meet all your rail equipment needs. Please call 415-398-4510 or visit our website at www.hlmx.com for additional information.

INFINITY RAIL, LLC

1355 Peachtree Street, NE, Suite 750, Atlanta, GA 30309; Websits: www.infinityrail.com. Larry Smith, VP-Equipment Sales; Tel.: 678-296-9709; Email: lsmith@ infinityfunds.com; Lee Martini, AVP – Sales & Marketing; Tel.: 678-904-6315; Email: lmartini@infinityfunds.com. Infinity Rail, LLC, is an Operating Lessor with a fleet of over 7,000 freight cars. We offer our customers both financial and operational flexibility. We offer Full Service, Net and Per Diem Leases to Shippers and all Class I, Regional and Short Line Railroads. A broad spectrum of general use and specially modified equipment is represented in the Infinity portfolio. Our fleet is comprised of covered

hoppers, boxcars, gondolas, open top hoppers, flatcars and inter modal equipment. Our in-house mechanical expertise allows us to offer you equipment maintenance and modifications that keep your leased railcars working for you.

MACQUARIE RAIL INC.

1 North Wacker Drive, 9th Floor, Chicago, IL 60606; Tel.: 312-756-3880; Fax: 312-756-3847; Email: railinfo@ macquarie.com; Website www.macquarierail.com. Macquarie Rail Inc. is a freight car lessor serving the North American marketplace. Through combining an experienced team of rail veterans with the strength and expertise of the Macquarie Group, we are building a diverse portfolio of equipment to serve the varied needs of railroads and rail shippers.

MITSUI RAIL CAPITAL, LLC

71 South Wacker Drive, Suite 1800, Chicago, IL, 60606 Phone 312-803-8880: John O’Bryan, President; Dan Penovich, Vice President Sales and Marketing; David Kerr, Director of Marketing; Dana Koenig, Director Sales; Dan Linklater, Director Sales; Scott Carroll, Director Sales. A highly experienced management team, a fleet of more than 10,000 modern freight cars, and high-quality service combine to give Mitsui Rail Capital customers an edge when it comes to transportation. In addition to a diverse fleet of the latest rail equipment, Mitsui Rail Capital offers fleet management and maintenance services as well as On-Trax, our proprietary internet-based system for fleet tracking, maintenance, and component wear management. Mitsui Rail Capital, LLC offers both net and full service terms as well as customized, value-added financing options. Our goal is to exceed customer needs in an increasingly dynamic and challenging environment. Mitsui Rail Capital, LLC is an affiliate of Mitsui & Co. Ltd.

PROGRESS RAIL SERVICES

Progress Rail Services, a wholly owned subsidiary of Caterpillar Inc., is a leading supplier of a full range of locomotive, railcar and track products and services. Our service and repair facilities are strategically located around the globe – with a network of more than 130 locations across the United States, Canada, Mexico, Brazil, Italy, Germany, and the United Kingdom – and our mobile crews offer even greater service flexibility. Our extensive inventory of parts and components allows us to reduce down time and return units quickly to service. We also offer recycling and demolition services. Our diversity of products and services means more value for our customers. Through its acquisition of Electro-Motive Diesel, Progress Rail furthers its commitment our customers, providing industryleading products and services. Founded in 1922, Electro-Motive Diesel is an original equipment manufacturer of diesel-electric locomotives. Contact Progress Rail Services, P.O. Box 1037, Albertville, AL, 35950, (800) 476-8769. www.progressrail.com. October 2013 Railway age DB11

RAILROAD FINANCIAL DESKBOOK 2014 lEssors cont.

RAILROAD APPRAISAL ASSOCIATES RELCO LOCOMOTIVES, INC.

P.O. Box 83282, Baton Rouge, LA 70884. Tel.: 815-4673030; Website:www.relcolocomotives.com. Relco, as one of North America’s leading locomotive rebuild, remanufacturing and leasing companies, can provide a full range of locomotive leasing and maintenance services. Since 1961, RELCO has developed a reputation for providing the finest motive power and custom maintenance packages to fit any need: • Full line of both switching and road power available. • Specifications ranging from qualified to completely custom remanufactured. • Aftermarket systems upgrades available, including radio remote controls, microprocessor control systems, fuelmanagement systems, etc. • Nationwide full-maintenance programs available. • Net, full-service, financial and sale/leaseback programs.

TRINITY INDUSTRIES LEASING CO.

2525 Stemmons Freeway, Dallas, TX 75207. Tel.: 800-6314420. Roger D. Wynkoop, President, Email: roger. wynkoop@trin.net; Eric Marchetto, Exec. Vice President, Email: eric.marchetto@trin.net; Jesse Crews, Chief Investment Officer, Email: jesse.crews@trin.net; Robert S. Hulick, Chief Mechanical Officer, Email: bob.hulick@trin. net; Thomas C. Jardine, Vice President, Email: tom. jardine@trin.net. Trinity Industries Leasing Company (TILC) is a wholly owned subsidiary of Trinity Industries, Inc. (NYSE: TRN), providing full service and net operating leases of tank and freight cars to railroads and industrial shippers throughout North America. Also available are a comprehensive portfolio of management and administrative services. Including majority-owned subsidiaries, Trinity’s total lease portfolio stands at approximately 74,000 railcars. Trinity Industries’ Rail Group and TILC coordinate sales and marketing activities under the trade name TrinityRail®, providing customers with a single point of contact for rail equipment and services. For more information please visit www.trinityrail.com. proFEssional sErvicEs

AMERICAN RAILCAR INDUSTRIES, INC.

100 Clark Street, St. Charles, MO 63301-2075. Tel.: 636.940.6020; Fax: 636.940.6100; Email: sales@ americanrailcar.com; Website: www.americanrailcar.com. We Build and Service the Whole Car! • Design • Manufacturing • Repair • Fleet Management Contact us to find out how ARI can be your preferred railcar supplier.

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Division of The Occor Company; Management Consultants providing a variety of consulting services to the railroad and urban transportation industries; and the financial institutions and leasing companies which serve them. Railcar and Locomotive Appraisal & Inspection Services for New and Used Equipment, Rail Equipment Portfolio Reviews and Valuation, Market Studies, General Consulting. We have over 20 years of market experience and data. Patrick J. Mazzanti, President; Ronda Lemons, Assistant. Headquarters: 1914 Springdale Drive, Spring Grove, IL 60081, (815) 675-3300; E-mail: pat@railroadappraisals.com.

RAILSOLUTIONS, INC.

1307 Jamestown Road, Suite 101, Williamsburg, VA 23185, 757-903-4606; Fax: 757-922-8229; Email: jhusband@ railsolutionsinc.com; Website: www.railsolutionsinc.com; James D. Husband, President. RailSolutions provides a broad variety of railroad equipment-related consulting, technical and advisory services to financial institutions, railroads, shippers and fleet owners with a primary focus on equipment valuation and appraisal services. Additional areas of expertise include railcar and locomotive inspections, equipment remarketing, equipment repair and overhaul cost analyses, and portfolio valuations. RailSolutions draws on over 30 years of railroad industry experience in railcar and locomotive equipment valuations supported by both a sound base of market data and advanced analytical techniques. railroad acquisiTion spEcialisT

PROGRESS RAIL EQUIPMENT LEASING

15173 North Road, Fenton, MI 48430; (810) 714-4626. Trent E. Marshall, VP & COO Maintenance of Way. The largest lessor of maintenance of way equipment in North America is a full-service leasing firm offering a host of programs and services specifically tailored to meet your exact financial needs. With more than 50 years of specialized experience in the railroad industry, our experts’ dedication and uncompromising focus on quality sets us apart from the competition. FCM develops leasing programs to cut equipment costs and provides leasing structures that are tailored to meet the rail industry’s specific and everchanging needs. Visit us on the web at www.progressrail. com/leasing.

The right equipment. The right terms. The right people. Taking your product to market efficiently and reliably requires the right equipment. First Union Rail has just what you need: modern railcars and experienced professionals who can offer reasonable leasing terms that make sense for your company. Let us help move your business forward with: Railcar financing and leasing • Reliable fleet management services • Modern, high-quality fleet Ready to learn more? Call today at 847-318-7575 • Firstunionrail.com © 2011 Wells Fargo & Company. All rights reserved. First Union Rail Corp. is associated with Wells Fargo & Company, a company that is not regulated in Canada as a financial institution, a bank holding company or an insurance company. MC-2235

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BAY AREA BUILDUP 20

Railway age

October 2013

Big cities can tout big projects. San Francisco keeps expanding its rail reach and effectiveness in big-city fashion out of proportion to its actual size. By DOuglas JOhn BOwen, Managing editor

an Francisco has a status, a recognition factor, of “big city” that’s far larger than one might expect for a city of its size—and that certainly extends to its experience with passenger rail transit. Cities across the North American continent scramble to replace the rail transit they tore out decades ago, or repair and upgrade what they barely held onto, or boldly start from scratch with a mile or two of new project. The residents of San Francisco can bask in the comfort of knowing what they already have—even as their city and surrounding neighbors, too, add to the passenger rail network. The Bay Area is perhaps the best urban rail transit smorgasbord in North America, sporting regional (“commuter”) rail, heavy rail rapid transit (BART), light rail transit and streetcar operations (MUNI), and, of course, the venerable cable cars that cater not just to tourists but to everyday city denizens on the move. All told, at least $2.6 billion in capital expansion projects are under way for a focal-point city of roughly just 813,000—far smaller than the 3.2 million of Los Angeles or the 8.2 million of New York (all 2011 Census Bureau estimates)—making San Francisco’s expansion efforts that much more the impressive per capita. Then, too, San Francisco is a focal point of the Bay Area, and per BART and Caltrain operations, serves as a nexus for at least 7.2 million people in the Bay Area reliant on solid rail transport.

BART keeps building up

It’s hard for some to believe that BART is now more than 40 years old. Along with Washington, D.C.’s Metrorail (1976), BART was a notable exception to rail’s ongoing retreat during the 1970s, starting up revenue operation in September 1972 when the U.S. was wrapping up wholesale dismantlement of rail transit nationwide. Though BART didn’t begin service in San Francisco proper until the next year, and though its headquarters are in neighboring Oakland, Calif., BART’s role in San Francisco has never been more critical, even if (or especially as) the system continues to expand beyond its current four-county territory south to San Jose. A BART study notes 10% of its morning ridership are San Francisco residents heading for work elsewhere in the Bay Area—movement other cities might term “reverse commuting.” October 2013 Railway age 21

san FRanCisCO

BART’s biggest move so far is southeast of San Francisco, with an $890 million, 5.4-mile extension of the Fremont Line to Warm Springs, Calif., now under construction. Completion of this segment is expected next year; the extension itself presaging access to Milpitas, Berryessa, and San Jose, with an additional 10 miles of right-of-way also under construction. Cubic Transportation Systems will activate the fare collection system on the extension and integrate it into the regionally interoperable Clipper® Card payment system. Local demographers, planners, and pundits already note the increase of tech workers going to work in Silicon Valley—but going home to digs in San Francisco proper, with 14 BART stations in the city itself. Indeed, BART’s future expansion focus may be more tightly aligned with central city planning. Plans are afloat for a four-tunnel crossing under San Francisco Bay parallel to existing BART right-of-way to serve San Francisco’s Transbay Transit Terminal. BART would occupy two tunnels, while Caltrain and the state’s planned high speed rail system—and, possibly, Amtrak—would utilize two others. Foundation work for the new Transbay Transit Center, located on Mission Street, is under way. BART officials and pro-rail advocates argue that such a plan strengthens the system’s core, where ridership and population density is strongest.

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Building Expectations

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Also on tap, though not in San Francisco itself: an extension of BART’s yellow line northeast of San Francisco, further east from Pittsburg/Bay Point. BART’s consolidated budget of $1.6 billion for fiscal year 2014, which began July 1, also includes $46 million for new rail rolling stock. Bombardier Transportation currently is supplying 410 new rapid transit cars. And BART’s $1.3 billion Earthquake Safety Program will be completed in 2017. Caltrain electrifies

The estimated $685 million Peninsula Corridor Electrification Project, upgrading Caltrain’s existing rail service between Tamien, Calif., and San Francisco, is part of the state’s “blended” approach to advancing high speed rail throughout the state and to San Francisco itself, one of two northern termini envisioned by planners. Caltrain electrification is one of only two such ongoing projects for regional passenger rail west of the Mississippi River, sharing the honors with Denver Regional Transportation District’s Eagle P3 regional rail project work. Indeed, Denver RTD staff has offered input into the Caltrain effort “on a range of project delivery methods that were considered for the PCEP,” according to the Peninsula Corridor Joint Powers Board, which oversees Caltrain service. Last month the Joint Powers Board authorized a design-build

contract approach for the electrification project, including the purchase of 96 electric multiple-unit (EMU) railcars. Construction, including right-of-way upgrades along Caltrain’s full 77 miles, is under way in preparation for 51 miles of electrified rail service from San Francisco to Tamien, Calif., beginning in 2019. Diesel service would cover the remaining stretch of line between Tamien and Gilroy until a second phase of electrification, not yet funded, is advanced. More immediately resonant with San Francisco residents is the 1.3-mile tunnel planned to extend Caltrain from its current city terminus, at 4th and King streets, to the new Transbay Transit Center, closer to San Francisco’s central business district. The Metropolitan Transportation Commission has made funding the $2.5 billion extension a high priority. Caltrain last month also announced initial work on its Communications Based Overlay Signal System (CBOSS) Positive Train Control (PTC) Project, designed to comply with federal requirements for PTC, as well as aid in electrification and modernization efforts. “The CBOSS PTC system equips the corridor with federally mandated safety technology and increases system capacity, which will help accommodate future increases in services and make it possible for Caltrain to respond to skyrocketing ridership demands,” Caltrain said.

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Railway age

October 2013

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san FRanCisCO MUNI LRT, streetcars power modal mix

San Francisco’s cable cars continue yeoman performance for city dwellers daily even as tourists marvel. Overlooked by visitors all too often are the roles of San Francisco Municipal Railway (MUNI) rail services, posing as light rail transit (LRT) on some routes, streetcar operations on other segments, with a novel mix of brand-new and rehabilitated rolling stock destined for expanded service. Buses and trolleybuses add to the varied public transit mix. Charges of lax or obsolete labor rules, coupled with concerns of rundown infrastructure, have dogged MUNI for decades. But even some of MUNI’s harshest critics aren’t automatically opposed to expanding its operations to meet San Francisco’s expected growth, with some noting that San Francisco streetcar/LRT operations are one of the “seven sisters” (or “seven survivors”) in the U.S. that escaped wholesale dismantlement in the post World War II years. The San Francisco Municipal Transportation Agency, overseeing MUNI, auto parking, traffic, and taxicab operations, appears eager to build upon that legacy. New LRT gear is slated to serve the $1.4 billion Central Subway line, extending LRT 1.7 miles, including 1.3 miles underground, north to Stockton and Clay streets under 4th Street, with connections to the prime Market Street MUNI (and BART) spine in the city. The project, considered an extension of the T Line,

was reinforced with $942.2 million in Federal Transit Administration (FTA) funds in October 2012; service is anticipated to begin in 2018. An additional extension north to North Beach and possibly the famed Fisherman’s Wharf is being considered, but is not funded. Streetcars, including rehabilitated historic rolling stock and including Presidents’ Conference Committee (PCC) cars rescued by Brookville Equipment Corp., already are a solid presence along San Francisco’s waterfront, and that presence is slated to grow. An E Embarcadero streetcar line is slated to link Fisherman’s Wharf and the current Caltrain terminus, and eventually the Transbay Transit Center. The route currently exists, with portions used by the F, T, and N lines; the stub-end layout at the Caltrain terminus mandates use of double-ended streetcars. More ambitious is a plan to extend MUNI’s F Line west a modest 0.85 miles from the Fisherman’s Wharf neighborhood through a tunnel once used by the San Francisco Belt Railroad to Fort Mason, part of the Golden Gate National Recreation Area. The National Park Service endorsed the proposal last March. Though the Park Service is considered the lead agency, and is expected to deal with numerous matters within federal lands affected, a footnote in the Record of Decision states, “SFMTA will retain full decision authority on system design.” RA

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October 2013 Railway age 25

People

Meetings

HigH Profile Carmen Bianco has been named President of MTa New york City Transit. Bianco previously served as head of New york City Transit’s Department of System Safety from 1991 to 1995. Bianco has also held senior safety positions at amtrak and NJ Transit, returning to New york City Transit in March 2010 serving as senior vice president of the Department of Subways, overseeing the entire subway system, before becoming acting president last april. He led the subway system through the MTa’s response to Superstorm Sandy, and oversaw Bianco the immediate efforts to pump out water and make round-theMTA-NYCT clock emergency repairs, the construction work to restore damaged areas to service, and the long-term planning to prevent future flooding. NyCT serves 7.5 million daily subway, bus, and Staten island Railway riders.

October 15-16 Railway Age Passenger

FLORIDA EAST COAST RAILWAYS— William Costantini named Vice President and Chief Transportation Officer, responsible for the FeC rail transportation network. FORT WORTH TRANSPORTATION AUTHORITY—announced President and executive Director Dick Ruddell has retired, effective Oct. 4.

Philadelphia. Elio Khayyat, P.E., appointed Senior Project Manager, infrastructure, based in little Falls, N.J. Scott Petretta has rejoined SySTRa as Systems Safety Manager, based in New york. Cameron Muhic joins SySTRa as a Rail Operations analyst, based in los angeles.

SUPPLIERS

Vossloh Fastening Systems America named Victor Wood Director Sales Urban Transit Systems.

Lochner appointed Craig C. Goodall, P.E., Vice President, responsible for rail and transit initiatives in the Northeast, based in Newburgh, N.y..

Watco Cos. hired Drew White as Director of engineering for Project Management.

Operation Lifesaver, Inc. named Drew S. McCaskey state coordinator for Delaware Operation lifesaver. Peter Pomonis named state coordinator for North Dakota Operation lifesaver. Diane Hall will lead the South Dakota state program. Parsons Corp. hired Jay Watkins as Vice President of Strategic Development. SYSTRA named Patrick Harrison, P.E., Vice President, Sector Manager, Systems, to lead the signal, communications and systems integration practice from the SySTRa’s New york headquarters. Steve Yazbek, P.E., appointed Communications Director. Craig Jones named Senior Signals engineer, serving as project manager on signal design projects, based in Philadelphia. Yazeed Khayyat, P.E., named Senior Project Manager, Traction Power, also based in 26

Railway age

October 2013

100 YEARS AGO in

(OCTOBER 1913) LOCOMOTIVE FUEL ISSUES Cape Cod towns sent a delegation of 50 to the forest fire hearing before the [Massachusetts] Public Service Commission on the petition of the state forester that the New York, New Haven & Hartford Railroad be required to use oil-burning locomotives in Barnstable County. In the past six years there have been almost an even 1,000 fires in that region and 79% of these originated from the railroad. But the railroad says that to substitute oil for coal would add $80,000 a year to operating costs. The forester regards this figure as far too high, and if the cost of fires is properly credited, it is not impossible that the increase will wholly disappear.

Trains on Freight Railroads

washington Marriott, washington, D.C.

Jane Poterala, Tel.: 212-620-7209; email: jpoterala@sbpub.com; website: www.railwayage.com.

November 5-6 Railroad Environmental Conference Rail Transportation and engineering Center — PailTeC National University Rail (NURail) Center University of illinois at Urbana-Champaign, Urbana, ill. Kimberley Schlichting, Tel.: 217-244-0841; email: hagemann@illinois.edu; website: http://ict.uiuc.edu/ railroad/RReC/overview.php. November 16-20 NITL Conference and TransComp Exhibition/IANA Intermodal Expo Hilton americas, Houston, Tex. Tel.: 703-524-4011; email: info@nitl.org; website: www.regexpo.com/aTS/ NiTl13/Client/1.asp. November 18-21 ASLRRA General Counsel Symposium and Finance & Administration Seminar w/ AASHTO Short Line Academy Kansas City, Mo. Jenny Bourque, Tel.: 202-6284500; email: jbourque@aslrra. org; website: www.aslrra.org. January 5-8, 2014 NRC Conference & NRC-REMSA Exhibition Palm Desert, Calif. ashley Bosch, Tel.: 202-715-1247; email: abosch@nrcma.org; website: www.mrcma.org/go/conference.

Products Miller touts Trailblazer, Bobcat diesel welder/generator lines

appleton, wis.-based Miller electric Manufacturing Co. offers its Trailblazer® 325 Diesel and Bobcat™ 250 Diesel welder/generators, both fully compliant with all applicable ePa Tier 4 Final emissions regulations. Both deliver multiprocess welding capabilities and smooth generator power for the professional welder. The Trailblazer 325 Diesel welder/ generators are designed to extend runtimes by 55%, reduce fuel use by as much as 25%, and reduce noise

by 40% for a safer, more productive jobsite. a redesigned case — now seven inches shorter and up to 80 pounds lighter — provides a smaller footprint, allowing a work truck to carry more equipment and heavier payloads. Two industry-exclusive technologies — both standard features— anchor the new Trailblazer 325 Diesel welder/ generators. Smart-Cor technology provides independent weld and generator power, ensuring no interaction between the welding arc and

GEA Delbag FireTex filter pads cut fire risk, slow germ formation Bochum, germany-based gea Delbag says rail vehicles equipped with HVaC systems operate with greater safety when equipped with gea Delbag FireTex® filter pads. Thanks to the filter medium, which consists of randomly configured, non-breaking polyester fibers, gea Delbag FireTex® filter pads do not produce smoke or burning droplets in case of airborne sparks or fire. The filter material is fire-resistant and melts without formation of toxic gases. as an additional benefit, the filter material from gea Heat exchangers is not only flame-retardant, but is also antiseptic, with the result that it minimizes any potential proliferation of germs—which means that employment of gea Delbag FireTex® filter pads assures hygienic exchange of air in railway vehicles. german Technical inspection agencies (TÜV/DMT) have officially attested the fire-protection properties of FireTex® and have classified it as B1 in accordance with DiN 4102-1:1998-05 (standard for the fire performance of building materials), as S4 with respect to flammability class, as ST2 for drop-forming classification, and SR2 in accordance with smoke-development classification. in addition, FireTex® filter pads are certified as Hl3, following Specification Section R5, according the most recent standard eN 45545-2:2013-08 (fire protection on railway vehicles). Contact gea air Treatment gmbH, Tel.: +49 (0) 2325 468-700; email: monika.heider@gea.com; website: www.gea.com.

jobsite tools. auto-Speed technology automatically adjusts the engine speed to run at lower speeds depending on the total power needed. For example, under low loads — such as welding with a 1/8-inch stick electrode — the engine will run at idle speed (2400 RPM). This technology lowers fuel use and reduces noise levels in the work area. The Trailblazer 325 Diesel welder/ generators are Stick, Mig, Flux-Cored and DC Tig-capable. They offer carbon arc gouging capabilities; the generators can power Spectrum® plasma cutters for additional cutting and gouging flexibility. The Bobcat 250 Diesel with versatile aC and DC weld output is well suited for mobile maintenance trucks and now features a smaller and lighter case, freeing up space in a work truck and allowing it to carry heavier payloads. its accu-Rated™ 11,000-watt generator includes a revolutionary 10-degree skewed rotor design(also featured in the Trailblazer Diesel welder/generators) for smoother generator power. Contact Millerwelds.com.

Ashcroft gauge handles pressure The new ashcroft® Type 2008S panel builder’s gauge incorporates exclusive, field-proven performance features into a rugged, all-welded front-flanged pressure gauge. The gauge dial measures 63 mm in diameter and combines stainless steel wetted parts and case along with the patented PowerFlex™ spring suspended movement to ensure superior reliability and longevity. liquid fill and PlUS! Performance™ are also available to dampen potential pointer bounce caused by vibration and pulsation. The ashcroft® 2008S is a high quality choice for monitoring pressures in a variety of installations, including oil and gas control panels. Contact ashcroft, Tel.: 800-3288258; website: www.ashcroft.com. October 2013 Railway age 29

Products Supertrak SK140-SPC can carry the full railroad load The New Supertrak SK140-SPC is a special purpose carrier for transporting large irregular loads on and off-road conditions. The SK140-SPC features a patent pending tilting subframe which is instrumental for positioning loads while operating over large irregular obstacles. The SK140-SPC has a compact design to utilize lowest transportation heights with low center of gravity. The SK140-SPC generates 140 horsepower, handles via remote control, and has 16,000 pound and 25,000 pound payload capacities Contact Dave evans, National Sales Manager, Supertrak, Tel.: 919-935-2595; email: dave.evans@ supertrak.com; website: www.supertrak.com.

Q’UBE 3-Point securement station from Q’STRAINT Q’Straint’s Q’UBe 3-Point Securement Station features a Sliding Bumper that provides critical stabilization and tip-over prevention required by aDa for 3-Point aecurement. it is designed

for transit operators maximizing passenger seating capacities in 2+2 seating layouts: a two-passenger forward facing flip seat combined with a two-passenger aisle facing flip seat.

The Q’UBe 3-Point can be mounted for many vehicle applications without the need to run cables or wires. Contact Dan Bruck, Tel.: 954-986-6665, ext. 205; email: dbruck@qstraint.com.

W o r l d ’s L a r g e s t C r a n k s h a f t M a n u f a c t u r e r a n d R e - M a n u f a c t u r e r

H e r m i t a g e , PA U S A 1 6 1 4 8 Te l e p h o n e 1 - 7 2 4 - 3 4 7 - 0 2 5 0 w w w . E l l w o o d C r a n k s h a f t G r o u p . c o m October 2013 Railway age 31

Products Hand-bendable Mega Snake adjusts to avoid obstacles Bay Shore, N.y.-based Snake Tray has introduced the hand bendable Mega Snake to bend around obstacles in buildings. Cable trays are never a straight run, so Mega Snake is the preconfigured high capacity overhead cable tray that comes in straights, turns, and Ts to make installation quick and cost effective. The bendable Mega Snake allows for dealing with any cumbersome obstacle. Mega Snake’s design can convey thousands of cables for large cable runs. Snake Rail™, a built-in suspension system, requires no brackets and allows for random placement of the hanging rod system. Snake Rail™ can seamlessly interface with other size Snake Trays as well as patch panels, strain relief, and fiber optic pass over devices. Onsite fabrication of turns, Ts, and cross-sections are no longer required.

Mega Snake™ is also built to allow nesting together for cost-effective shipping and easy onsite handling. Snake Tray says customers note its products can be installed as fast

as 900 feet per hour. The company’s engineering team can help design the exact cable tray solution for a given application.

For further information on Snake Tray® products, contact Snake Tray, 291 Skip lane, Bay Shore, N.y. 11706; Tel.: 800-308-6788 or 631-674-0004; Fax: 800-881-6641 or 631-6740010; email: info@snaketray.com; website: www.snaketray.com.

CALL FOR PAPERS AREMA invites all interested parties to submit Papers on subjects of interest to the railway engineering community to be considered for publication and/or presentation at the AREMA 2014 Annual Conference & Exposition in Chicago, IL from September 28 - October 1, 2014. Please visit www.arema.org for additional information and to submit a paper online. Questions? Please contact Mandie Ennis at mennis@arema.org. Paper Submission Deadline: December 13, 2013 Please note our new mailing address:

AREMA

4501 Forbes Blvd., Suite 130 Lanham, MD 20706-4326 USA

Phone +1.301.459.3200 (no change) Fax +1.301.459.8077 (no change)

www.arema.org

Railway age

October 2013

Ad Index Company

Phone #

Fax

Email address

Page #

aReMa

301-459-3200

301-459-8077

marketing@arema.org

Chromium Corp.

216-271-4910

216-271-4195

ccinfo@chromcorp.com

CiT

212-461-5713

212-461-5694

abby.cohn@cit.com

Cummins, inc.

+44 1325 55 6251

David J. Joseph Co., The

513-419-6200

513-419-6221

txs@djj.com

ellwood Crankshaft & Machine

724-347-0250

724-347-0254

ecgsales@elwd.com

First Union leasing Corp.

847-384-5392

847-318-7588

richard.seymour@wachovia.com

DB15 DB8

DB7

andreas.skiadopoulos@cummins.com

3 DB16 31

Flagship Rail SVCS, llC

312-559-4800

312-559-4829

eileen.oneill@flagshiprail.com

FreightCar america

312-928-0850

312-928-0890

ewhalen@freightcar.net

greenbrier Companies The

800-343-7188

503-684-7553

gbrx.info@gbrx.com

Helm Financial Corp.

415-398-4510 ext 1610

415-398-4816

bwind@hlmx.com

DB13 DB13

infinity Rail llC

678-904-6306

908-904-4908

lsmith@infinityfunds.com

lTK engineering Services

215-641-8826

215-542-7676

tfurmaniak@ltk.com

MaC Products

973-344-0700

973-344-5891

edward.gollob@macproducts.net

Progress Rail Services

256-505-6485

256-840-2651

bcox@progressrail.com

R&w Machine Division

708-458-4200

708-458-3299

jwarner@rwmachine.com

Railquip, inc.

770-458-4157

770-458-5365

sales@railquip.com

Railroad Financial Corp.

312-222-1383

312-222-1470

tkruglinski@railfin.com

DB6

30,DB2

Rails Co.

973-763-4320

973-763-2585

rails@railsco.com

Rail Solutions

703-922-3800

703-922-8229

railsol@aol.com

Railworks

866-905-7245

952-469-1926

jrhansen@railworks.com

Railway educational Bureau, The

402-346-4300

402-346-1783

bbrundige@sb-reb.com

Regions Bank

404-832-3408

646-264-9535

matthew.chamberlin@mindshareworld.com

Siemens

800-SieMeNS

Stage 8 locking Fastners, inc.

800-843-7836

DB4 23 18,28 5

www.usa.siemens.com.transportation C4 415-532-2923

robert@stage8.com

Advertising Sales MAIN OFFICE Jonathan Chalon, Publisher 55 Broad St., 26th Floor New york, Ny 10004 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com AL, AR, IN, KY, LA, MI, MS, OH, OK, TN, TX emily guill 20 South Clark Street, Suite 1910 Chicago, il 60603 (312) 683-5021 eguill@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, WV, CANADA – QuEbEC AND EAST, ONTARIO Mark Connolly 55 Broad St., 26th Floor New york, Ny 10004 (212) 620-7260 Fax: (212) 633-1863 mconnolly@sbpub.com

AK, AZ, CA, CO, IA, ID, IL, KS, MN, MO, MT, NE, NM, ND, NV, OR, SD, uT, WA, WI, WY, CANADA – Ab, bC, Mb, SK Heather Disabato 20 South Clark Street, Suite 1910 Chicago, il 60603 (312) 683-5026 Fax: (312) 683-0131 hdisabato@sbpub.com bELGIuM, PORTuGAL, SWITZERLAND, GERMANY, EASTERN EuROPE, bALTIC STATES, MIDDLE EAST, SOuTH AMERICA, AFRICA (EXCEPT SOuTH AFRICA), FAR EAST (EXCEPT KOREA, CHINA, HONG KONG, INDIA), ALL OTHERS, TENDERS louise Cooper international area Sales Manager The Priory, Syresham gardens Haywards Heath, RH16 3lB United Kingdom +44-1444-416917 Fax: +44-(0)-1444-458185 lc@railjournal.co.uk

SCANDINAVIA, THE NETHERLANDS, SPAIN, GERMANY, AuSTRIA, KOREA, HONG KONG, CHINA, AuSTRALIA, NEW ZEALAND, SOuTH AFRICA, RuSSIA, RECRuITMENT ADVERTISING Steve Barnes international area Sales Manager The Priory, Syresham gardens Haywards Heath, RH16 3lB United Kingdom +44-1444-416375 Fax: +44-(0)-1444-458185 sb@railjournal.co.uk ITALY, ITALIAN-SPEAKING SWITZERLAND Dr. Fabio Potesta Media Point & Communications SRl Corte lambruschini Corso Buenos aires 8 V Piano, genoa, italy 16129 +39-10-570-4948 Fax: +39-10-553-0088 info@mediapointsrl.it

JAPAN Katsuhiro ishii ace Media Service, inc. 12-6 4-Chome, Nishiiko, adachi-Ku Tokyo 121-0824 Japan +81-3-5691-3335 Fax: +81-3-5691-3336 amkatsu@dream.com CLASSIFIED, PROFESSIONAL & EMPLOYMENT Jeanine acquart 55 Broad St., 26th Floor New york, Ny 10004 (212) 620-7211 Fax: (212) 633-1325 jacquart@sbpub.com

October 2013 Railway age 33

pRoducTs & seRvIces

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pRoFessIoNAL dIRecToRY

Locomotive repair shop with a pit available for sale in Monroe, GA (1 hr. east of Atlanta). 7,200 sq. ft. bldg. on over 17 acres of land with 727 feet of rail frontage. Contact Kyle Chong at kyle@railtrusts.com or (904) 241-4176.

Reidler can help you comply with the FRA ruling by offering prismatic reflective yellow delineators that meet their specifications. • 4" x 150 fl Rolls (kiss-cut available) • 400 candlepower retroreflection • Application instructions provided

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Trainers and Training Developers The Railway Educational Bureau is in the process of creating a training and development database to be used as a resource for the railroad industry. If you have experience training in an instructor-led environment and/or developing training materials for the rail industry, and are interested in becoming a part of our group, please send your resume to:

Brian Brundige The Railway Educational Bureau 1809 Capitol Avenue Omaha, NE 68102

Railway Age classified section Jeanine Acquart 212-620-7211 jacquart@sbpub.com 34

Railway age

October 2013

Turning Opportunities into New Business Get up-to-the-minute business intelligence by subscribing to GlobalRailTenders.com Powered by

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Legal Notice The Connecticut Department of Transportation anticipates the need for consultant services to perform various transportation related activities during the 2014 calendar year. Consulting firms having a desire to provide such services must be prequalified by the Department. A listing of categories of services for prequalification and the format for submittals can be obtained by visiting the Department’s internet web site: http://www.ct.gov/dot/lib/dot/2014_full-length_Legal_Notice.pdf

through the Annual Consultant Prequalification link or by contacting the Consultant Selection Office at (860) 594-3017. Submittals must be hand delivered by the November 15, 2013 due date or postmarked by this date and received within 14 days. Connecticut Department of Transportation An EO/AA/ADA Employer ReCRuitment

EDNA A. RICE, EXECUTIVE RECRUITER, INC (713) 667-0406 FAX (713) 667-1651 Web address: www.ednarice.com Email: resume@ednarice.com

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Railway Age Digital Edition For More Marketing Power contact JACQUART@sbpub.com October 2013 Railway age 35

Perspective DAVID LINK

Light density rail routes face populist threat

or those of you who have experienced the downs and ups in this industry as I, you might ask what is relevant about a little railroad up in the woods of the U.S. Northeast. I would warn there is a troubling growing trend that will effect short lines, regionals, and even Class I railroads that own and operate lighter density lines or have track out of service pending reactivation. The non-profit Adirondack Scenic Railroad has operated since 1992 and continues to grow. Starting as an out-andback four-mile train ride on Class 1 track, the railroad (seen at right) now operates over 74 miles on mostly Class 3 track with a connection to Amtrak in Utica, N.Y., the terminus of the 143-mile former New York Central branch to Lake Placid, N.Y. Last year, the line carried 77,000 passengers while preserving the line for potential freight traffic. The line is owned by the New York State DOT and leased to the operator. Between Big Moose and Saranac Lake, N.Y., are 70 miles of excepted track used only for equipment moves. During the winter the railroad is closed and snowmobilers are allowed to use the right-of-way during that season.

Trouble looms for lighter density lines and out-ofservice track. Several years ago a small group of wealthy retirees, along with recreational and environmental activists, teamed up to fund a “study” by the Rails to Trails Conservancy which led to the pre-paid conclusion that the line was no longer as a viable transportation asset. 36

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The sales pitch was (and is) that the public would reap untold economic, cultural, and recreational benefits if a rail asset was destroyed for construction of a trail, at unspecified cost, for bicyclists, wheelchairs, elderly, joggers, etc. Put differently, the Rails to Trails Conservancy now funds studies that advocate destruction and removal of active railroad. Meanwhile, studies demonstrating the economic value of the railroad, and data showing trail construction costs are higher than completing the railroad, have been ignored and misrepresented by the conservancy and trail proponents. The conflict has been distracting at best for the Adirondack Scenic Railroad, whose efforts, employees, and volunteers have been continually bashed by the trail activists’ smear campaign fueled by a co-conspiring newspaper editor. Local politicians are second-guessing decisions best for the economic and environmental

future of the region, running for cover, and vote counting. How is this relevant to the industry? How does it threaten your railroad operation? If the trails gang wins in the Adirondacks, the victory will spur new fights anywhere a group can justify destroying rails, with the pain felt anywhere they can gain traction. Railroads big and small considering railbanking or relaying track on previously abandoned ROW should have strong concerns. Look at Norfolk Southern’s Carlton Hill branch in New Jersey being usurped. UP’s Royal Gorge, KCS’s Rosenberg Cutoff, BNSF’s Stampede Pass, and CN’s Klappen Mountain projects also come to mind. Thousands of miles of light density branches could be challenged with an “economic” review of dubious integrity. David Link, co-founder of the Adirondack Scenic Railroad, has 40 years of transportation management experience.

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